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Market News

 February 22, 2018
Why Conservatives really ought to love carbon taxes

 Ignore your lying eyes for a second and entertain the following: Conservatives really ought to love carbon taxes.

Bear in mind all that is wholesomely right-wing about the idea. First of all, unlike our progressive income-tax regime, with higher brackets for higher incomes, a carbon tax doesn't disproportionately affect the rich -- it's "flat."

Even better, it harnesses the power of markets by letting consumers decide how much (plausibly priced) carbon it's worth emitting, rather than using regulations and subsidies to tweak emissions from the top down.

And, yes, it's a tax, but because it's explicitly designed to reduce the thing it's taxing (emissions), it's a lousy way for treasuries to gobble up revenue and permanently expand the size of government.

Preston Manning began making roughly this argument about five years ago in a series of op-eds, and through his participation in something called the Ecofiscal Commission. Yes, Preston Manning -- the champion of Albertan prerogatives and godfather of the modern Canadian right.

So you might expect that, in the intervening years, as the threat of climate change came ever more sharply into focus and Canada committed itself to heavy emission cuts through the Paris Agreement, that the country's conservatives would have embraced this relatively laissez-faire approach to tackling the world's most important challenge.

Alas, your eyes weren't lying: Carbon taxes have not only failed to catch on with conservative parties in this country, they have become anathema, the sort of policy most Tories won't touch with a barge pole.

Since the ouster of Patrick Brown, all three contenders for the leadership of Ontario's Progressive Conservative Party have promised to scrap the carbon tax contained in their platform.

Jason Kenney, leader of Alberta's United Conservative Party, has made scrapping the province's carbon tax central to his platform. Saskatchewan's new premier, Scott Moe, attacks carbon taxes every chance he gets.

The federal Tories are no better. Of the candidates to lead the party last year, only Michael Chong called for a carbon tax, and he was jeered for it, then got roughly the square root of no votes. Now Andrew Scheer, the victor in that contest, says his first act as prime minister would be to kill the federal carbon tax.

Since the idea is, to quote Mr. Chong, a "credible, market-based, conservative" way to lower emissions, what gives?

The name doesn't help. Selling a "carbon tax" to the conservative base is like pitching "welfare cuts" to the left: It's hard to do. Certain right-wing voters get hives when they hear either of those words, let alone both together.

We don't claim that putting a levy on carbon comes without political risk -- look what happened to Mr. Chong, and witness the populist beating NDP Premier Rachel Notley is taking on the issue in Alberta.

But we're talking about substance, not optics. And conservatives have not been able to mount a substantive case against carbon taxes, because there isn't one. In fact, there is solid Canadian evidence that it is both effective and suitable to conservative values.

In B.C., where a right-of-centre Liberal government imposed a carbon tax in 2008, principled conservatives have a case study waiting to be deployed. In its first seven years, the tax brought down the per-capita emissions from sources it covered by about seven per cent, while in the rest of Canada those emissions held steady. Meanwhile, economic growth in B.C. outstripped the country's.

And here's what should really make Tories salivate: As set up by the Liberals, the B.C. tax was formally revenue-neutral, meaning every dollar collected had to be returned to taxpayers. In the first few years of its implementation, offsetting tax cuts actually cost the provincial treasury more than the levy brought in. It was the opposite of a cash grab.

If they work and they're conservative -- and they do and they are -- what's stopping Canadian Tories from going all in on carbon taxes? Some, it seems, are genuinely unconvinced by the evidence staring them in the face. Others don't believe a small country like Canada has a role in fighting climate change -- or don't believe in climate change at all. And some are just using the word "tax" to scare people.

It's the sort of thing that makes you rub your eyes and wish they really were lying.