It is a New Year and I now reside in a province that is subject to a carbon tax. Yes, on January 1, Alberta’s Socialist Lite Government implemented a 4.49 cent tax per litre of gasoline, 5.35 cents on diesel, 3.08 cents on propane and $1.011 per gigajoule of natural gas.
The reason for the disparate product levies is that the rate is based on the amount of carbon released by the product when combusted, not on the volume of the product itself. There is no levy on electricity, which strikes me as odd because we still have coal fired power generation in this province, although it is being phased out.
Since I won’t get a natural gas bill until the end of January, the only immediate effect on me will be at the pumps. Gasoline prices in the Edmonton market are always erratic. Regular Unleaded traded between $0.89 and $0.95 most of the fall, then inexplicably bumped up to $1.08 right before Christmas. I was away over the holidays; when I returned on January 2, it was $1.10. Tuesday, I saw some stations at $1.06. Today, everybody appears to be at $1.03.
Nobody understands gasoline pricing. It is an unfathomable combination of imperfect competition imposed upon the price of crude, refining capacity, inventory and futures speculation. However, I do know this much: a refinery on the Gulf Coast can go off line and the result will be more than a 4.49 cent spike at the pumps in Edmonton. Which is to say, do not expect seismic shifts in consumer choices over a 4.5 cent carbon tax. Mass hysteria maybe; but little change in consumption habits.
Social Media and Talk Radio are replete with doomsday predictions and photos of politicians filling their tanks or adjusting their thermostats accompanied by some choice words for Premier Notley.
Nobody likes taxes; but everybody likes government services. And this carbon tax, similar to almost every other source of government revenue is just that—a source of government revenue. The NDP Carbon Tax makes no claim of revenue neutrality; so, at the very least, it can be said to be honest.
It is a tax, plain and simple. Much of the cry and moaning surrounding it centers on two arguments: Alberta is in a deep recession and Albertans do not accept sales taxes. The latter is pure mythology. Alberta has a bevy of hidden sales taxes on cigarettes, liquor and even a hotel room tax dedicated to tourism marketing.
The former complaint is slightly more compelling. Like any tax increase, Albertans’ current ability to pay it is reduced. If your business is down (most are) or you have lost your job (>65,000 of us have) you have no, or at least limited, ability to pay more.
But the Government knows this and the spinning has begun. Environment Minister Shannon Phillips was dispatched to a Media Availability Session on January 2 (a notional holiday since the New Year fell on a Sunday). She urged Albertans to look past higher pump prices and focus on the upcoming “benefits”. Top of the list was the Prime Minister’s conditional approval of two much need pipeline projects.
Next was the soon to be launched three new energy efficiency programs including free installation and rebates for homeowners. Indeed, the Government has a long list of project and priorities it needs to pay for. Funds will be made available for farms, businesses, non-profits and universities and hospitals to address heating, cooling and lighting. The Minister went on to boast that carbon tax revenue will be used to fund green infrastructure projects, invest in renewables, and lower the small business tax.
And don’t forget the rebate cheques! They will start flowing this month to low and middle income Albertans to help offset the pain of the carbon tax. Phillips concluded: “It’s day two of the carbon levy and the province is still standing”.
Indeed it is. In fact, other than the opposition dissing and counter political spin, not much has changed. Nor is it likely to. It was -24 C Tuesday; predictably my wife cranked the thermostat up. Cars were in que at gas pumps. This weekend, if it warms up, I will go snowmobiling. I doubt if a 4.49 cent tax will deter my fellow revellers. If it stays cold, I will stay inside with the thermostat still cranked.
And that is the rub here. If the government believes this carbon levy is going to change our consumption habits, it is sadly mistaken. Alberta is cold in the winter and is sparsely populated. When it gets cold, we need natural gas. We might be able to reduce consumption marginally by installing an energy efficient furnace, but we are still going to consume.
And gasoline—I have spent $1.50 per liter in 2008 and $0.59 per liter in 2015. I have never not gone somewhere I wanted to, or gone somewhere I didn’t need to, based on the price of gasoline.
If the government really wanted me to consume less, the levy would be $1.00 per liter or more; that might cause me to rethink driving to the office or at least carpooling.
Similar to the taxation of alcohol and cigarettes, the government is less interested in your health than it is in your money. If it wanted to curb consumption it would make the taxes prohibitive not merely painful.
On this point, I agree with the Environmental Lobby—a moderate tax of less than 5 cents per liter is going to do nothing to address climate change. It is simply a government doing what all governments do—raise revenue, so that it can spend on its priorities and pet projects. And if the government changes, the only thing that might change is the sources of revenue and the specific pet projects.