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Green Shift doesn’t go far enough

Canadians by now have thrown in the towel on Stephane Dion. For months the nebbish Liberal leader has endured a barrage of attacks on his persona, his speech, and his alleged intent to “screw everybody” with a carbon tax.

Canadians by now have thrown in the towel on Stephane Dion. For months the nebbish Liberal leader has endured a barrage of attacks on his persona, his speech, and his alleged intent to “screw everybody” with a carbon tax. Anyone who holds a shred of hope for him must feel in pretty light company.

There’s a simple reason for this: Canadians are lazy. They don’t want to investigate the intricacies of Dion’s ideas because they’re so used to the force-fed simplicities of Stephen Harper’s campaigning. For Harper, an oil splotch and a pooping puffin is the best way to get a message out. And Canadians are lapping it up, if any recent poll is an indication.

If our leaders are going to debate each other, Canadians deserve to see them do it in an intelligent manner that goes beyond offensive Flash animations and one-liners that sound good in news stories. And since our Prime Minister is incapable of doing that, I’ll gladly step up to the plate and take on Dion’s “Green Shift.”

The philosophy behind the Green Shift is fairly simple: new taxes on fossil fuels such as diesel and propane are offset by cuts to revenue sources such as income and corporate taxes. As the Liberals put it themselves, “the federal government does not increase its revenues through a new tax.” Theres’s nothing punitive about it, if Mr. Dion is to be believed.

There is, however, a serious problem at the heart of this plan: does it really go far enough?

Carbon taxes, by their very nature, should be punitive. They work in a manner similar to the Goods and Services Tax (GST): with GST you’re taxed on anything you take out of the economy, with carbon taxes you’re taxed on anything you put into the atmosphere.

The whole point behind a carbon tax is that you be punished for pumping dangerous fossil fuels into the air. Under Mr. Dion’s plan, however, you’re almost rewarded for it.

The carbon tax will fund an ambitious set of tax cuts as part of the plan. They include cutting the lowest income tax rate from 15 per cent to 13.5 per cent; middle class tax rates from 22 per cent to 21 per cent; annual credits of $150 to rural Canadians; and a $350 universal child tax benefit on top of all other existing child benefits.

The Liberals call this a “shift,” meaning the taxes will simply be redistributed from income to carbon. But in order to make it revenue-neutral and carry out all the tax cuts they plan for, people would actually have to keep on polluting in order to ensure the government makes the money it needs to make the necessary cuts. That’s very risky if they intend to maintain a fiscal balance.

Controversial as this is, contrast it with the other plans on offer. The NDP is peddling a cap and trade plan that targets major industrial emitters. These emitters, the NDP says, account for 50 per cent of our country’s greenhouse gas emissions. Jack Layton wants to force them to pay emissions credits that would later go to the government and help the feds invest in green technologies.

A benevolent mission, to be sure, but what would it say to industries if they found out they had to pay an exclusive tax for doing what they need to do to make money? Easy: They’d say Canada is not a place that’s friendly to business. Hardly the message you want to convey in uneasy economic times.

Look at this in more simple terms. Jack Layton is pushing an exclusive screw job that targets half of Canada’s emissions, while Stephane Dion is pushing an equal opportunity screw job that targets 100 per cent of Canada’s greenhouse gas emissions.

If you don’t work in industry, you might prefer to see the big, bad emitters take the brunt of federal carbon policy. But that’s just not fair. We’re all complicit in the thickening of our atmosphere, and all of us should take an equal share of that burden. It’s just too easy to pawn the blame off on big industry and expect them to solve our climate woes.

Yes, Mr. Dion’s plan has some serious problems. Rural areas that aren’t hooked up to power grids could suffer because they depend on diesel to generate electricity. Other communities like Whistler could suffer because they depend so much on propane (and soon natural gas). And as TD Bank economist Don Drummond notes, it’s highly unlikely that all Canadians will get back what they pay in carbon tax.

Mr. Dion’s proposal is, nevertheless, the most ambitious but equitable solution out there. It doesn’t single out big industry for ruining the planet and it at least proposes a solution for the hurt that wallets will feel if it ever comes through.

Carbon taxes in general are something that the electorate will just have to get used to. And Stephane Dion deserves at least a little credit for inching us in that direction.