A Cost of Carbon Taxing

So Stephane Dion officially announced his Carbon Tax platform today and in response both sides have come out swinging. Websites have been created, television interviews done and the lines in the sand have been drawn.

There are many different issues that the Carbon Tax brings up including the revenue neutral claim, its harmful effects on certain groups and its proposed tax breaks. But how will it affect Canada's economy? And more specifically international trade.

I am by no means an economist, I understand the very basics and that doesn't extend beyond what was taught in my introductory economics classes. What I do know is that the more products are taxed, the more they will cost the consumer to acquire, which decreases demand.

Introducing the carbon tax increases the cost of products and therefore the cost of living. But wait Mr. Dion's plan promises tax cuts to help with the added costs of products that use carbon. That means everything is fine, the Canadian economy will be secure because we will have extra money to adjust to the increased costs of living. Unless of course you are not getting the tax breaks; like people who don't live/pay taxes in Canada.

Implementing Dion's carbon tax would make it more expensive for other nations to buy from Canada. Increased energy costs will increase production costs. Transportation costs are going to increase the cost of getting the product to the consumer. Both increase the cost to the consumer. Increased cost means less demand meaning international consumers look elsewhere for their products. Canada's economy shrinks and jobs are lost. I wonder what tax cuts Mr. Dion plans for people who have no income.

Also and unfortunately, Canada is a net exporter of dirty energy. While we do dabble in hydroelectricity, Canada's major energy exports are oil and natural gas. These are dirty fuel sources and are punished by the carbon tax. Our other major exports are lumber, agriculture and automotive which are all carbon intensive. This means the carbon tax would make all of these exports more expensive and decrease demand which means our economy will suffer. The Liberals' Carbon Tax would therefore punish Canadians for having an economy built on the products available to them and established generations before them.

Now I am not against moving to more environmentally friendly practices. I don't think anyone is, except maybe the corporations that sell dirty energy. All of the major political parties in Canada have come out and said that it is important for Canada to "go green." The difference is how the parties want to achieve this. The Liberals want to punish bad behaviour, the Conservatives and the NDP want to reward good behaviour. And yes, I also find it strange that the NDP and Conservatives agree on something but maybe that just goes to show how the incentive option in smarter/better.

Making Canadians suffer through increased living costs while at the same time negatively affecting the economy is not the way to endear green living to the Canadian people. Greener living is better achieved through innovation and responsible choices, not making life harder.

- blenCOWe