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Putting the Army Boots to Federal Climate Policy

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A neat little piece of climate policy work was just released, albeit quietly, during the federal election. Nic Rivers and Mark Jaccard have been taking analytical jabs at various climate policies for a very long time. Their central theme has been to compare, from an analytical perspective, what government’s say they will achieve and what their policies will most likely deliver. Their latest contribution, with Jotham Peters, can be found here and provides this nice conclusion:

We conclude that, as currently designed, it is highly unlikely that the policies of the government of Canada will achieve the target of reducing national emissions 20% below 2006 levels by 2020. The lack of an economy-wide emissions price and the allowance for 100% offsets for industrial emitters make it highly likely that emissions will be significantly higher than target levels in 2020 and indeed might even be close to today’s levels. Since the government claims that it is intent on achieving its 2020 emissions reduction target, it is difficult to understand why it does not immediately convert the intensity cap to an absolute cap and eliminate or severely reduce the offset provision. It also needs to extend its cap to cover all emissions in the economy.

The bottom line is that politicians have been promising to save the world for a very very long time but have instead been burning our cash while getting very little done (see Nic and Marks other paper here: Burning Our Money to Warm the Planet).

All climate policy by addressing energy use and production can have wide-ranging and long-term effects in the economy, touching virtually everyone as costs get passed through prices. This is why the election climate policy “debate” , and I use this term loosely, deserves more serious attention. But then again in politics, and especially in this campaign, thoughtfulness is in short supply — “Says who… and your Mom wears Army Boots”. Too bad, cause their political gain is our economic and environmental loss.

Written by Dave Sawyer

October 2nd, 2008 at 2:42 pm

The Financial Crisis and Harpernomics: Bad Climate Policy is Here to Stay

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While my computer spins away churning out some carbon capture and storage modelling numbers, I was scanning the news and it struck me: the good times are here to stay! That is if you are working in climate policy. For everyone else, it seems to be all doom and gloom. Not sure why? Let me explain.

Uncertainty leads to questions that need to be answered and importantly inaction. With this comes a need for more talk, more time and more money to navel gaze. Crass I know, but true. And two events are conspiring to make climate policy uncertainty enter the stratosphere and inaction become the renewed climate policy watchword: the financial meltdown and subsequent economic train wreck and Harpernomics.

Lets start with the financial train wreck. With all the financial doom and gloom one can’t help but project that climate policy, and certainly anything that actually reduces GHGs, will grind to a global halt. That well worn Affordability ace will again be played and it will trump all thoughts of action. And instead of learning that short term thinking and economic gain is bad (dah how did we get here?), we will instead retreat further into short term thinking. See this interesting Boston Globe Article here.

The fiscal crisis on Wall Street is a painful lesson in how entire industries can delude themselves into ignoring the most fundamental issues – in this case, the hidden risks from subprime mortgages. It also reveals the vast pitfalls of an economic system obsessed with short-term gains and growth at all costs while ignoring essentials such as building long-term shareholder value and protecting the future of the planet….

The result will be a halt of current plans, or at least a considerable slowing, which will mean the last 10 years of learning will be lost and we will need to start all over again (or at least start somewhere new).

And What Can I can about the Prime Minister’s new climate policy….well perhaps I will let some one else say it instead:

I have never heard of such a poorly considered policy in my life.

(see here)

If the oil patch was nervous before, they all just called their therapist, or their favorite climate policy consultant…..

So, while I should be rejoicing at the growth field that is climate policy, I am actually totally disheartened. A simple and strait forward carbon tax with recycling to households and business would make this all go away. We would get something done, at a reasonable cost, while containing the upside risk. But instead, we will get fights in the WTO and NAFTA over half baked policies that are perceived to resonate in Tim Horton’s. Trouble is that double double may just be a little more expensive than a simpler alternative. But then again it’s not a tax! Pass an Apple Fritter.

Written by Dave Sawyer

September 29th, 2008 at 9:35 pm

An Election Primer on Cap-and-trade vs Carbon Tax

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Ok, I am back at it, after a long absence. And to kick off, I am posting a rather long diatribe on cap-and-trade vs tax. At this point in the federal election, I thought it would be good to post a good look at the differences between cap and trade and tax. Cause the federal parties are certainly not going to shed any light on the differences, since they are stuck in a perpetual school yard tiff — “your climate policy sucks” “Oh yah, yours sucks more”. So this primer is not to be confused with the current primary school debate between the parties. And these guys are to be awarded the keys to the Treasury. Yikes.

So, here goes…

A national debate has exploded in this federal election surrounding the preferred mix of climate policy instruments – should Canada have cap-and-trade or carbon tax? In this post I look at what is likely driving this shift. A second objective is to provide an overview of how this shift is perceived by stakeholders. I conclude that design matters, and in every policy there will be winners and losers, and thus the policy preference is rooted in perceived interests and bias.

Since the early 1970’s economists have argued that either cap and trade or a tax on emissions can be equally desirable at achieving cost-effective emission reductions. Over time, economists have further muddled the instrument choice distinction by advocating a mixing and matching of design elements of both so that cap and trade systems adopt the desirable elements of a carbon tax and vice versa. Notably, concern over cost containment (price certainty) has led cap and trade systems to have price safety values, like the Liberal government’s $15 price guarantee and the Regulatory Framework’s Technology Fund. Taxes have similarly been designed to be adjustable so that emission reduction certainty (quantity certainly) is achieved through adjusting tax rates. This blurring of the lines between cap and trade and tax has led many economists to observe that policy design more than the choice of instrument is the major driver of economic, environmental and distributive outcomes.

Of course economists are not the decision-makers and cap and trade has become the dominant pricing policy due to political acceptability. But as the Canadian cap and trade system has been slowly revealed, there is a growing concern amongst the regulated community and ENGO’s alike due to complexity and uncertainty. Issues of environmental effectiveness, administrative simplicity, transaction costs, risk and uncertainty and the equitable sharing of the burden of reductions all lead to questioning the current design of cap and trade. But, make no mistake, the inertia behind cap and trade in Canada, typified by many years of consultation, and the need for linkages to regional and international trading systems likely means that cap and trade is here to stay. The question is then not a matter of cap versus tax, but when can a carbon tax be complementary?

With the inability of a cap and trade system to include all emissions in the economy, and notably small emitters, cars and buildings, cap and trade in Canada has emerged as a cap, credit, trade and rule system. With carbon tax as a politically unacceptable option, the designers of Canada’s cap and trade system have had to design a complex carbon policy by enabling broad-based offset credits and other regulatory rules in an attempt to obtain widespread reductions. In theory, broadening the scope of emission reductions through broad-based offsets lowers costs for the regulated emitters. In practice however, there are real concerns over additionality, which is how to demonstrate that reductions for sale as credits are real, and permanence, or how to account for agricultural or forestry sinks which will release emissions in the future. Also, regulations tend to be technology prescriptive, thus taking away decision making flexibility that can lead to cost-effective reductions. Many are now arguing that a simpler approach would be to have a complementary carbon tax that covers emissions outside of the 50% of the large emitters under cap and trade.

The rise of cap, credit, and trade has obviously led to new business opportunities for those involved in credit supply either directly through credit sale or indirectly through transactions. But while sellers see opportunities, buyers face more complexity adding both risk and cost. This then explains why there are splits within industries on the preferred policy mix — sellers of emissions such as small emitters or those with relatively lower emission intensities may perceive themselves benefiting while those larger emitters and higher intensity emitters face compliance risk and higher cost. Given the complexity of the trading system that is emerging, and the associated risks and costs, it is no wonder that many large regulated emitters are looking to alternative compliance options such as the Technology Fund under the federal government’s Regulatory Framework. These flexibility mechanisms define cost and minimize uncertainty while avoiding the complexity and uncertainty of the trading and offsets markets. The one glaring gap in the Technology Fund, of course, is that it is unable to define, with any reasonable degree of certainty, actual GHG reductions as a result of such investments.

This perceived complexity and uncertainty of cap, credit and trade has led a surprising cross-section of interests to advocate a carbon tax. Administratively simple, the carbon tax can work within existing tax structures, can be applied at the point of fuels sales based on carbon content and virtually cuts away many of the decisions and structures around cap setting, allocations and offset. Issues of revenue recycling can be resolved, but do raise legitimate concerns about equity, with industries or regions receiving possibly less than they may pay. It is also more equitable, as it sends a price signal to those not facing a carbon price under the cap, credit and trade system.

Further supporting the argument for a carbon levy/tax measure, there continues to be a perception by many in industry that cap and trade places a check/limit on production. Whether or not this is a real concern is an open question, and a function of how the cap and trade system is designed. Indeed, a carbon tax could be designed to act like a binding or hard cap with both systems more or less influencing output the same if they send an equivalent emission price. Any impact on output would then be related to how emission permits are allocated in cap and trade or how tax revenue was recycled under a carbon levy. But if allocations or recycling are tied to economic output in a sector, there would be an incentive to expand output since compensation, in the form of free allocations or recycled carbon tax revenue is tied to output. Again, from an environmental perspective, there is a trade off to the extent that with more output comes more emissions. This is another example of how cap and trade and tax can be designed to operate similarly, where differences really stem from how they are designed and implemented.

While business is worried about containing costs, ENGOs are focused on emissions reductions and policy effectiveness. While in theory cap and trade addresses emissions certainty through cap setting, again design matters and rising emissions under the current intensity based system and the associated suite of compliance options such as the Technology Fund has ENGOs concerned. This, coupled with the perceived ineffectiveness of offsets and the lack of a broad based price signal on business, buildings and transportation have further give rise to ENGO support for carbon taxation. ENGO proposals that seek economy-wide emission pricing through a carbon tax also introduce revenue recycling to address regressive impacts on households and to incent new emissions reducing technologies in transit and buildings. While cap and trade can raise revenue from auctioning, a carbon tax is seen as a more expedient means to raise revenue.

While many outside of government have looked to a carbon tax, it is not until very recently that both federal and provincial politicians have pondered the possibility of a carbon tax. While many motives likely drive this, a number can be readily identified:

• The ability of the tax to raise funds for additional priorities;
• The relative administrative simplicity of a tax is more closely aligned with existing administrative functions and tax authorities;
• A broad based signal, where all in the economy can targeted; and,
• Reduced compliance costs through revenue recycling and tax shifting, where distortionary labour and capital taxes can be reduced.

Finally the public (yes you) is much more fickle in their preference. Generally, there is a perception that carbon reductions will be costless. Social marketing has led many to believe that technology investment in hybrid vehicles and compact florescent lights, for example, are both sufficient to meet the challenge and are costless through energy savings. But in reality, the emission reductions contemplated by most governments come with a price that consumers will ultimately bear to some extent. This then leads to emerging public perception that carbon policy will cost, and perhaps a carbon tax is relatively more punitive than technology standards. But with tax shifting in British Columbia this perception is likely changing. After all, Canadians may just dislike income taxes more than carbon taxes. But then again, perhaps not.

While support for a carbon tax is growing, it is unlikely to displace cap and trade given its inertia. A more realistic policy package that could emerge is cap and trade for large emitters with offsets. But this would narrow the scope of application of the carbon policy leading to higher abatement costs and likely a level of complexity that would become onerous in time. A more cost-effective policy would shift towards a carbon tax focused on the remaining 50% of national emissions outside of the large emitters. Offsets would still have a place in the policy given emissions from agriculture and forestry, and targeted regulations in buildings and transport would be required to address emissions insensitive to emission pricing. This policy package would then retain the benefits of cap and trade while enabling an equitable price signal throughout the energy economy with a complementary carbon tax.

A final balancing of cap and trade versus tax then comes down to design and perceived interest. In Canada, the perception that a cap and trade would place a real cap on production along with the rise in complexity of a cap and trade system that contains an intensity target, broad range of offsets and a technology fund (ironically, these are features developed at the behest of industry in the first place) has led many to argue that a carbon tax is preferred. But regardless of instrument design, it is the perceived cost burden that really drives instrument choice preferences. This then indicates that preference over cap and trade or a carbon tax requires a careful examination of the financial implications of the policy on an operation.

But then again, knee jerk reactions to the word “tax”, which is being dogmatically perpetuated for political gain, will mean we get just what we want least — a high cost climate policy.

Written by Dave Sawyer

September 25th, 2008 at 3:48 pm

The Manitoba Carbon Tax two step…

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Design matters. Just take a look at Manitoba. The government’s April 09, 2008 budget introduced a carbon tax on coal of $10/tonne starting in 2011. The casual observer, depending on their particular bias would say either: it is not enough; it is a good start; or why introduce another punitive tax? So, which is right? Well, none actually.

Coal accounts for about 1.3% of all energy consumed in Manitoba, 80% of which is in the electricity sector. For the province, coal totals about 2% of all energy and 7% of all carbon emissions from energy. So, at best a low carbon price will be targeted at about 7% of all emissions.

And oh did I mention the following (see here)

The decision comes as Crown-owned Manitoba Hydro prepares to phase out its last coal-fired electrical plant in Brandon.

So, I suspect we are seeing the emergence of the carbon tax coming full circle on the political acceptability front. Indeed our baby is growing up. It is taking its rightful place amongst other notable ineffective Canadian climate polices such as voluntary inaction, soft cap and rule (a description of the current federal cap and trade plan) and now the great disappearing carbon tax.

Which is why, as we all know, design matters but political will rules. Sure we can debate cap vs tax, allocations or revenue recycling design, but political will sets stringency. Period. So, without a push from the electorate, or that sudden and rare political epiphany as in the case of BC’s Premier Gordon Campbell, inaction will continue to define Canadian climate policy.

Drink anyone?

Written by Dave Sawyer

April 10th, 2008 at 1:33 pm

Political Will and Effective Policy….The BC “Tax won’t be adjusted”

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When a government commits to a policy, any policy, one can usually expect some deviation from the initial stance as the constituent’s line up with their grievances. That is after all how public policy is implemented. Which is why there are some surprising words coming from the BC Finance Minister on how the BC carbon tax will be implemented and why BC may get cost-effective carbon policy (see here):

“There are so many sectors, not just geographic, that have been asking for some sort of special treatment or exemption that … if you go down the road of starting to make exceptions and exemptions then you would have to, at some point, just give up on the idea of pricing carbon,” Ms. Taylor said in an interview yesterday.

Excluding some from the carbon policy is expensive as it transfers the burden of reductions to some and not others. These policy “carve-outs” can ultimately increase costs since low cost options are not sought from all, which is also inequitable. Randy Wigle a professor at the University of Wilfred Laurier has a nice paper from some years ago on why exclusions are expensive for a given abatement target (see a short summary here). He states,

If any carbon restrictions are focused narrowly, the resulting plans can be extremely costly when all abatement occurs within Canada. The narrower the focus of implementation plans, the higher the cost to Canada…In the case where the most energy-intensive sectors alone are targeted, the welfare cost roughly doubles, but this result relies on the availability of a backstop technology which could provide added abatement at constant cost.

Twice as expensive you say? Hmmm…now where have we seen a plan that targets large emitters alone and relies on a backstop technology such as CCS?

And then there are these additional comments from the BC Finance Minister to further indicate that the BC policy may just be implemented with style:

“From our point of view, putting in a broad-based tax so it is equal for all users of carbon-emitting fuels, and doing it at a very low level so people have lots of time to think about whether or not they want to make any adjustments, is the right policy and we will stay with that policy.”

A broad-based application is central to cost-effective reductions. Plus ramping up the policy allows folks to plan capital upgrades to more closely align with normal capital stock turn-over. So, some strikingly clear words from a government facing pressure over a new policy.

Politicians are not known for weathering a barrage of grievances, and so if BC’s deeds echo their words, climate policy in Canada may just have that gold carbon standard from which other policies are compared. While it is early days for the BC policy, they seem to keep getting it right.

Written by Dave Sawyer

April 7th, 2008 at 1:12 pm

The Rise of the Safety Value — Cost Containment and Rising Emissions

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While academic economists have long argued for a carbon tax, the political realities have driven policy to cap and trade. In response, those smart folks thinking of good policy design came up with the “safety valve” to allow for cost containment. The safety value concept has political appeal since it essentially caps the upside costs of a cap and trade system and so takes away the uncertainty of what cap and trade may end up costing emitters. It also has had appeal in the past since the climate fight was thought to be a marathon and not a sprint where cost containment seemed more important than short term action. But this has changed as new climate science points to the need for deeper action sooner. And so the rise of the safety valve is worth considering and needs a closer look.

The safely value is a significant component of Canada’s current climate policy in the form of the technology fund (payments to the feds for technology development and deployment) and the recently refined pre-certified projects mechanisms (i.e. payments for CCS). Both of these allow for some share of emissions to be paid into the two compliance mechanisms on a declining balance to 2018. They are in effect a tax that is accessed 100% up to 2018 if compliance costs or permit prices rise above the access price of these compliance mechanisms, capped at about $23 in 2017 (see thumb below). How the 65$ per tonne cost announced recently by the feds interacts with the pre-certified projects list is not yet clear to me, but still it is well below the costs of CCS for the reductions required under the government’s 2020 target of -20% below current emissions.

Given its prominence in Canadian climate policy and indeed worldwide, it is useful to better understand the safety value. An excellent article emerged recently on the history and development of the safety value (see here),

What started as an obscure, almost monastic dispute among economists three decades ago has now emerged as a potential make-or-break point for the proposed legislation. Tracking its tangled history may now be essential to outsiders who want to understand this issue — and the huge economic stakes involved — as champions on both sides of the political arena saddle up to do battle over it.

As well as a good post at Common Tragedies (see here),

The key issue with the safety value will be the tension between those that want it to be very high, and so ensure emission reductions and those who define cost containment as no cost at all and so want a low value. In the Canadian case, the safety value has been set very low, and so emission reductions during to 2012 to 2018 period will be correspondingly low. This is not pure conjecture but rather based on modelling, where Canadian compliance costs indicate that the technology fund will be fully subscribed at the current price caps.

And so, we are left with a tax layered on a cap and trade system. While the policy skeptics decry that a tax will not work, by extension neither will cap and trade, at least not how it is being implemented in Canada. And with the science arguing for more reductions, the current design of the safety value will leave Canada with a growing stock of high emitting technology that will be costly to alter in future years. That is, if politicians eventually decide to take action, future compliance costs will be higher due to short-term inaction. Canada’s use of the safety valve, it seems, is about shifting the cost and therefore political burden in time.

tech_fund.JPG

Written by Dave Sawyer

March 21st, 2008 at 3:25 pm

Canadian Climate Policy — An Emerging Jungle of Taxes and Regulations

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Jack Mintz provides an nice overview of the key issues facing Canada with respect to carbon taxation (see here). I like the article because it is somewhat boring…it reveals some key issues, nestles carbon taxation within existing tax structures in Canada and generally points to why a carbon tax is likely the way to go – it works within existing structures.

Assignment of taxing powers in a federation is an old question that Canadians have endlessly debated. …As a rule, the taxes best assigned to the provinces are those that do not interfere much with the free flow of goods and services within Canada, are relatively easy for provinces to collect and are related to their spending powers, such as regarding health, education and infrastructure. Gasoline excise taxes, for example, have been viewed as a relatively good tax to assign to provinces since their payment is (albeit imperfectly) related to the use of roads and highways, and does not disrupt much the integration of the Canadian economy…A carbon tax, such as the one recently imposed in British Columbia, is a typical excise tax, as it is applied to carbon emissions generated by fossil fuels consumed by consumers and businesses within the province.

Broadly, economic instruments can be transitional, that is work within existing structures such as taxation or resource (water) pricing or transformational, which requires a wholesale change in how governments manage, say to a cap and trade system with new administrative functions.

Administrative simplicity is important since governments have limited budgets, and well adding new administrative functions generally means that other priorities such as toxics or water management are left cannibalized. This is particularly the case for municipalities and provinces, but if one speaks with folks managing the environment at the national level, and designing climate policy in particular, it is clear that there is a real lack of resources to get the job done.

So, with Canada’s new soft cap and rule program, the transformation required for implementation can’t be overstated – it will continue to chew up resources from Environment Canada and other priorities will suffer. Toxics management, species at risk and water issues all come to mind. In all policy there are trade-offs, and it is important that we recognize these. In Canada’s emerging jungle of carbon pricing and regulations, many will get eaten.

Written by Dave Sawyer

March 20th, 2008 at 1:25 pm

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With Soft Cap and Rule, Equivalency Looks oh so Much Brighter

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I had the good fortune of being briefed on the details of the federal government’s climate plan this week. What is interesting is that the briefing occurred during a break in discussions of how a carbon tax might be applied nationally and might complement cap and trade. As I sat listening to the government official, and all the complexity of the new federal plan was revealed, all I could think about was the equivalency clause. Simply, equivalency allows the provinces to implement their own plan if it is somehow equivalent to the federal program. While this will need some sorting out, the comparisons between the elegance of the BC climate plan based primarily on a carbon tax shift and the sheer complexity of the “soft cap and rule” federal plan led me to think of equivalency as the great hope for Canadian climate policy. That is, provinces and their industries will look to the federal plan, try to get their head around all it entails and I suspect instead will start planning their own simplified approach.

The other big observation is that of cumulative emissions, where the latest additions, and especially the focus on Carbon Capture and Storage (CCS) and the technology fund extension called “certified projects” will result in a step change in reductions around 2018 or 2020. And this points to a problem with targets in a GHG setting – target attainment says nothing about cumulative emissions. One can emit like crazy and then hit a target with a step change reduction in a single year, and voila the target is attained. But total emissions over the proceeding period will be high, which is why early and sustained action reduces total emissions and hence the climate risk. And modelling also shows early and sustained action is cheaper since technology decisions that are not influenced today are expensive to deal with later.

Which is why equivalency could be good for Canadian climate policy. In the face of a soft cap and rule regime, a carbon tax shift looks oh so much brighter.

Written by Dave Sawyer

March 15th, 2008 at 4:13 pm

“The price gap will close,”…which is the whole point of carbon taxes

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The climate science skeptics are turning into climate policy skeptics with each new climate policy announced. The basic argument is that the policy will be ineffective at reducing emissions and so is a waste of effort and money. There is a particular focus on the ineffectiveness of carbon taxes to reduce emissions (here),

At the same time, the mill’s managers have thumbed their noses at the global warming theme, replacing natural gas as a supplementary energy source with dirtier, but cheaper, coal…. It’s opposite from the behaviour that Mr. Campbell’s new carbon tax is supposed to produce.

While many policy skeptics decry that carbon taxes do not work, they are ignoring some simple policy truths. First, not all taxes are designed to create an incentive function, where changing behaviour is the objective of the policy. The Quebec carbon tax is a clear case of a tax designed for fiscal reasons, to raise money for other purposes, and in this case for investments in low emitting technologies.

Second, transition costs can be expensive and inefficient. Page one of that first year environmental economics textbook says that the tax should be phased in time to minimize dislocations and transition costs. One wants to go slow to get the cheap reductions first and then work up in time to the more expensive reductions. In cap and trade the same principle holds, where the initial cap is set low and ratcheted down in time.

So the quote in the above mentioned Globe article is a good one,

“The price gap will close,” the official said.

It may be cost-minimizing for that pulp mill to burn coal for the next five years given the level of the tax, but in time this will change. And that, my friends is why policy certainty matters – you know those folks burning coal are looking to the future and trying to figure out when that lump of coal ends up in their stocking. Expectations matter and good climate policy makes clear that the price gap will close. It is just a matter of when, and not if.

Written by Dave Sawyer

March 7th, 2008 at 1:58 pm

Posted in carbon tax

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“We need to do that for our economy,” …add unnecessary costs that is

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The federal Minister of Finance again needs to be commended for his statements that Canada needs some sort of climate policy consistency at the federal and provincial levels (here),

“It’s probably inevitable we have some different approaches now that don’t fit together,” Mr. Flaherty told reporters at a news conference, after a speech to the Vancouver Board of Trade…But he said it will be in Canada’s interest to eventually reconcile the various approaches. “We need to do that for our economy,”

The problem is that Canada does not have leadership on this issue,

Mr. Flaherty did not speak to the question of who would lead this convergence.

But perhaps even more troubling is the shots at Ontario, the praise for BC, and the incongruence between economic policy and climate policy in the federal government’s mind

“It’s not helpful for Ontario to be the jurisdiction in Canada with the highest business taxes and I am going to continue to say to the government of Ontario that, ‘You’re discouraging business investment,’ ” he said, calling those policies “unhealthy” for Ontario’s economy and the Canadian economy as a whole.
He praised B.C. for its move to cut the corporate income tax rate from 12 per cent to 11 en route to 10 per cent by 2011.
“Congratulations to the government of the province of British Columbia for doing that. It will help brand Canada. It will help attract investment to Canada, but the province of Ontario has shown no indication of going in that direction to reduce their business tax.”

The current federal plan provides no mechanism to raise revenue and therefore there is no chance for further drops in federal corporate income tax. Add to this the observation of many that the federal cupboard is bar due to unproductive tax relief such as the GST cut and unchecked federal spending and well, there is no room for the Ministers prized policy – that of further reducing corporate taxes.

So, not only is the current federal plan likely to be high cost, due to its focus on regulatory approaches, subsides and offsets, but there is no opportunity to further reduce unproductive taxes on corporations and personal income. Simply, climate policy is not being integrated with economic policy, a shortcoming that will necessarily lead to higher costs.

Perhaps when the minister asks “ Mirror, mirror on the wall, who has the lowest climate policy cost of all” the minister will be surprised to find that he has the urge to send poison apples to more folks than just Premier McGuinty.

Written by Dave Sawyer

March 6th, 2008 at 1:39 pm