WHY THE GREEN PARTY CARBON PRICING PLAN MAKES NO SENSE
In a recent (August 28, 2018) article published on his Leader’s Blog titled “Carbon Pricing Leadership” – which appeared the same day in the Guardian under the title “A Price on Carbon“, Peter Bevan-Baker states:
It may not be “strategic” but I prefer to be honest with voters. I have great confidence that Islanders, who live in one of the provinces most susceptible to the effects of climate change, and with a long history of attachment to this special place, will take the time to grasp why we have to act decisively. In fact, I’m willing to bet my political future on it.
If Rex Murphy’s analysis of carbon taxes presented in a recent article he published in the National Post titled “The Green Energy Act is Dead: Let that be a Warning to Green Politicians,” is correct, then Peter Bevan-Baker may very well be doing exactly that – betting his political future on his commitment to imposing a carbon tax:
When the people got to judge their glorious green future in an election, the Liberals were transmuted into a rump. If any politician wants to see how greenism and the famous equation of federal Environment Minister Catherine McKenna works out in the real world (“the environment and the economy go hand in hand”) check out Ontario. Note those Liberal numbers, and note well too, that a Mr. Doug Ford “I am become Destroyer of Carbon Taxes” is Premier.
When I recently (September 19, 2018) suggested in a Facebook Post that the Green Party’s leader may not have anything close to “unanimous” support for implementing a Carbon Tax within his own party saying…
From what I’m hearing, Peter Bevan-Baker’s personal commitment to the imposition of a carbon tax on Islanders (no matter what) has not only upset many within the Green Party, but seriously calls into question whether the Green Party can itself operate in a truly democratic manner – where issues are allowed to be decided by the majority vote of the Party members rather than the “this issue is not up for discussion” position of the leader.
…. a person comment asking the following question (and “tagging” Peter) …..
Has there been a release of information – that would help share insight as to the proposed plan of constructing an: Island Made – Carbon Tax Fund/Offset – Initiative Plan…Available for us to review and consider?
…Peter Bevan-Baker replied saying: “Coming imminently – watch media over next 48 hours.”
The following day (September 20, 2018) the Green Party posted that plan (with Carbon Pricing Plan Summary; Carbon Pricing Plan Background; and Carbon Pricing Plan FAQ supporting documents) on the Office of the Third Party Website.
After carefully reviewing the information in this plan, I am at a complete loss to understand how it makes any sense – like the critics (and there are many) I just can’t understand how such a carbon tax will achieve the aim the Green Party says it will achieve, e.g., reduce greenhouse gases (GHGs) by encouraging Islanders to “alter” their behaviour and lower their use of carbon fuels. Nor do I see how the claims made by the Green Party regarding the “neutral pricing” nature of the plan make any sense, nor are those claims supported with intelligent arguments, or verified with any hard data. So I want to treat each of these two issues separately in this short blog.
Will a Carbon Tax reduce Greenhouse Gas use in PEI?
The Green Party carbon pricing plan will be “revenue neutral,” which means no money generated from the carbon tax to be imposed on carbon fuels will go to pay for any energy efficiency programs or new “carbon friendly” alternatives….everything collected will be returned to Islanders through a quarterly “dividend” system.
So the question that obviously presents itself is: “If a tax is going to be collected from Islanders based on their use of carbon-producing gases, and the full amount of that tax revenue is going to be given back to Islanders, why bother collecting that tax at all?”
The Green Party’s answer is: “to modify behaviour and encourage Islanders to use less fossil fuel.” As stated in the Carbon Pricing Plan Summary,
“The higher cost of carbon would encourage people to spend less on fuels, while the Dividend would offset the impact of these higher costs.”
But think about that for a moment. If the dividend offsets the impact of the higher costs, where’s the incentive to “spend less on fuels”?
In the Green Party FAQ, we read:
How does a carbon price reduce emissions?
It changes behaviour. Prices influence behaviour, and by placing a price on carbon emissions, individuals and businesses are given an incentive to reduce their emissions to save money.
The vast majority of Islanders – especially poor and struggling Islanders, of which there are many – are likely already spending as little on fuels as they possibly can. It’s unlikely that Islanders are producing a lot of GHGs from the frivolous or easily dispensable use of carbon fuels…so how will Islanders be able to reduce their use of these fuels which they are dependent upon to get to work, grocery stores, etc., or heat their homes… without suffering as a result of those reductions? Is the Green Party carbon pricing plan going to encourage Islanders to be cold (or a little colder) in the winter time? Or to fake being sick a little more frequently so they don’t have to drive to work as often?
A modest annual rebate divided up quarterly is not going to empower Islanders who are already poor and struggling just to get by from month to month to buy expensive carbon-reducing technologies, such as heat pumps for their homes or electric and/or hybrid vehicles.
The operating assumption in the Green Party’s calculations “costing” out the plan and determining how dividends will be disbursed seems untenable to me: i.e., “the poorer you are, the less GHG you produce.” What’s the scientific (or even “logical”) basis for that assumption? There is no hard evidence presented to back up that assumption – expressed in the following graph presented by the Green Party:
It says that “calculations” are based on studies by Dobson and Winter – but I’ve reviewed those studies, and I don’t see the connections between what is said about Alberta and what happens on PEI.
Perhaps I’m missing something – and maybe someone within the Green Party can explain how their assumptions makes sense – but the Islander who makes less than $30,000 still has to drive to work every day and heat his or her home in the winter, just like the person earning between $30,000 – $50,000 a year. In fact, it’s likely the poorer the person, the less “energy efficient” the car and furnace, and the more gas burned and carbon emissions produced with both car and house, yet the Green Party claims that if you make under $30,000 you spend roughly $300 and if you make between $30,000 and $50,000 you spend nearly $800 per year. I don’t get it.
Will the Green Party Carbon Tax only cost 3,000 Islanders anything?
I believe the claims being made by the Green Party that the vast majority of Islanders – everyone except about 3,000 Islanders, after you crunch the numbers – will either receive as much back with their quarterly dividend to completely “offset” the additional costs they pay for gas and home-heating fuel with a carbon tax are wildly exaggerated and have no real basis in fact. On the Green Party Facebook page it states:
“Island households would receive a quarterly cheque tied to their income rather than their carbon footprint. Households in the four lowest income quintiles will receive a dividend greater than their average household carbon cost.”
[Editorial Update: Since posting this article a couple of hours ago I’ve had a respectful and lively exchange with a Green Party candidate who has raised some valid concerns, which have, in fact, further clarified what I believe to be an embedded incongruency in the Green Party Carbon Pricing Plan. It was pointed out to me that despite my using the chart from the Green Party’s data using “household data” from StatsCan, and also citing a statement from the Green Party mentioning “household” income data from StatsCan, I then proceeded to talk about the income levels of “individuals” rather than households.
My reason for doing so is because I understood that the Green Party plan will be calculating and processing “individual” dividends based on “Income tax” data, not StatsCan household data, and the only way to practically ‘categorize’ or place Islanders within one of the five quintiles presented by the Green Party as the method for determining whether “individual” dividends will be provided, is through a calculation based on “individual” salary levels using personal income tax returns. I assumed that despite discussing household income levels in presenting and justifying the plan, the quintiles will not categorize households, but “individuals,” and roughly only 3,000 individual Islanders – give or take – would fit into the fifth quintile.
My contention that the Green Party Carbon Pricing Plan doesn’t make sense stands…using household financial data to explain and justify the plan, when individual income data is actually used to administer and deliver the plan, not only represents a very confusing and embedded incongruency, it could be construed as misleading.]
If that statement is true, then it means that somewhere between 2,000 – 3,000 Islanders with an income greater than $110,471 will be shouldering the entire cost of the carbon pricing plan, including paying many Islanders some “surplus income” via a Carbon Tax dividend! I’ll explain how I arrived at that number.
The 2016 federal Census Data provides income profiles of Islanders (using 2015 data) as follows:
Putting these numbers into the five “quintiles” created by the Green Party in their Carbon Pricing plan (the categories are only roughly comparable, since the income categories are not exact) shows just how few Islanders will – according to the Green Party – be “paying” out of pocket as a result of the carbon tax:
For reasons given above, I would suggest that poor and moderately poor Islanders are likely to purchase more – on average – carbon producing fuels, and consequently, pay more carbon tax (quite possibly much more) than the dividend they will receive. Having to pay a further “tax” on top of those purchases will not encourage them to modify their behaviour and purchase less carbon producing fuels, it will just make them suffer a little more as a result of that tax making them a little poorer.
I believe the Green Party’s claim that “Households in the four lowest income quintiles will receive a dividend greater than their average household carbon cost” is both unsupportable with facts and ludicrous in nature. But just assume that it could be proven accurate….now consider for a minute what that would mean.
If everyone in the first four quintiles were to “make money” with the Green Party’s carbon tax as is claimed, then it makes absolutely no sense to impose a tax on all Islanders only to give it back to them from the carbon tax paid by less than 3,000 of PEI’s richest Islanders! As explained above, it not only eliminates any expected “incentive” for the majority of Islanders to change behaviour, it offers no substantial means for them to invest in any “GHG-reducing” technologies to actually do so.
It would be a lot less complicated – and far less costly administratively – to simply impose a “green” tax on anyone falling within the Green Party’s highest quintile (between 2,000 – 3,000 Islanders) and then use that money to allow other Islanders to actually purchase the high-priced technology that would allow them to reduce their use of carbon fuels with a targeted grant-funded program from the provincial government.