Federal Carbon Tax: the Issues


[DRAFT 1.0] Experts around the world seem to be aligned in their opinions relative to the effectiveness of a carbon tax in reducing carbon dioxide emissions.  Such were the views expressed in a recent report by the Calgary-based National Energy Board ("NEB"), entitled "Canada's Energy Transition - An Energy Market Assessment".  Reference has also been made to 27 Nobel Prize-winning economists who opined that "a sufficiently robust and gradually rising carbon tax will replace the need for various carbon regulations that are less efficient".  At least as it pertains to Ontario, focusing on the question as to whether a carbon tax is or not effective or economically efficient is mischaracterizing the direction that discussions in Canadian law and politics have taken vis-a-vis Canada's federal carbon tax.

Ontario's Constitutional Challenge to the Federal Carbon Tax

The Federal Government's Arguments Responsive to the Province of Ontario


As best demonstrated by the constitutional challenge brought by the government of Ontario before the Ontario Court of Appeal in mid-April, much of the debate in Ontario has centered on whether a federally-imposed carbon tax respects Canada's constitutional division of legislative powers and the extent to which the carbon tax undermines Canada's collaborative federalism.  The government of Ontario's position is essentially that it is capable of reducing provincial carbon emissions without interference by the federal government. In salient support of its position, it highlights the fact that Ontario was the first jurisdiction in North America to achieve a 100% phase-out of coal-generated electricity from its electricity supply mix without interference by the federal government. According to a report by the Independent Electricity System Operator, the phase-out of coal-generated electricity has lead to more than an 80% decrease in greenhouse gas emissions in Ontario's electricity sector. 

Federal Carbon Tax Issues Raised at the Federal Level

What's the True Cost of the Federal Carbon Tax?


At the federal level, discussions have also not centered on the question of whether or not a carbon tax is an effective way of fighting climate change. As regards to Ontario's constitutional position vis-a-vis the federal carbon tax, arguments have been to the effect that climate change is a global issue, that greenhouse gas emissions transcend provincial borders, and that a national response is needed to address the problem.

Double Taxation and Beyond


In the House of Commons, the conservative opposition has highlighted the Trudeau liberal government's lack of knowledge of the true cost of a carbon tax as well as the potential for there to be double taxation by levying HST on top of the federal carbon tax. Owing to the uncertainties as to the true cost of a carbon tax, conservatives have sought to undermine the liberal's assertion that "families" will be getting back more than they paid in "climate action dividends".  Gender politics have also seeped into the debate with at least one conservative MP arguing that a carbon tax will have a disproportionate effect on "women".  Some authoritative commentators have also canvased the economic inequalities between small, medium, and large businesses in Canada, and the extent to which each will be responsible for footing the "carbon tax bill". 

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