Friday, April 22, 2011

Carbon Tax Explained!

My Libertarian friend is at it again. Saying that Government has no role to play in the economy. He says it's the unions and regulation that are holding the country back. His latest post attacked a carbon tax. Let me explain what my blogger friend may not understand. First a carbon tax isn't taxing the regular consumer. It taxes industries that pollute, and gives every cent in income tax reduction to regular Canadians. But a carbon tax isn't just taking money from you then gives it back to you no. Julia Gillard the Prime Minister of Australia best explains it here . As you can see a carbon tax will make products more expensive and the tax cuts from the carbon tax will make the net total 0. You lose no money! But companies that innovate and make there products using less Co2 will get taxed less and can reduce there prices to get an advantage when it comes to prices against there competitor. So you save consumers money and you sort of push companies to innovate so that they can remain competitive. In fact the OECD even recommended Canada to have a carbon tax and reduce income tax. In Sweden where they have a carbon tax of 150$ per ton saw there economy actually grow not diminish like my Libertarian friend thinks will happen. We shouldn't wait for oil prices to raise naturally so high that consumers will start to change there habits. We need to do it now so our economy isn't so addicted to oil when it runs out. Even Former US Federal Reserve chairman Paul Volcker suggested (February 6, 2007) that "it would be wiser to impose a tax on oil, for example, than to wait for the market to drive up oil prices." If we just allow the markets to solve our problems, and take off government regulations Canada's banks would have gone under like the U.S banks did. The Canadian government set regulations so that there wouldn't be a sub prime mortgage crisis.

2 comments:

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  2. Thanks for the quick explanation...
    I've been in the dark about CO2 taxing and where the greasy-pig is in the scenario...but I guess it's all about the implementation. If CO2 producers are actually taxed and that flows into Canadian society somehow...w00000000t!

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