Federal Carbon Tax

[mariomike]

Quite frankly if she's calling in to Rush Limbaugh, I suspect she's not that attuned to actual economic data and is probably spitballing based on what she thinks is true.

Or, repeating what she hears Rush telling his listeners about carbon tax,
https://www.google.com/search?sxsrf=ACYBGNTWVRhKvZcNovRbgQlYDQPN891b-w%3A1577420560391&source=hp&ei=EIcFXvmCFZG0tAa9kYqoBg&q=%22rush+limbaugh%22+%22carbon+tax%22&oq=%22rush+limbaugh%22+%22carbon+tax%22&gs_l=psy-ab.3..35i39.3162.16181..16645...1.0..0.554.5672.5j13j2j6j1j1......0....1..gws-wiz.......0j0i131j0i67j0i20i263j0i131i67j0i10.Re6d1clAArY&ved=0ahUKEwj5yqTB_dTmAhURGs0KHb2IAmUQ4dUDCAs&uact=5#spf=1577420575268

 

[QV]

Generally with regards to the carbon tax, I see a whole lot of people really failing to understand what it actually is and how it's supposed to work. When we file our individual/family taxes each year, each family gets a rebate that in the majority of cases will exceed what we as a family spent in increased costs due to carbon taxation.

Now that right there is priceless.  You’re saying the majority of people will MAKE money with another tax imposed on them.  LMAO!!  Well then... I can’t wait!

 

[brihard]

Now that right there is priceless.  You’re saying the majority of people will MAKE money with another tax imposed on them.  LMAO!!  Well then... I can’t wait!

Thank you for nicely highlighting my point. The problem with tax policy is it doesn’t often digest easily and meaningfully into explanations that will fit in a tweet.

 

[Eaglelord17]

Until the rebate is slowly decreased until it disappears but the taxes remain...

 

[QV]

Thank you for nicely highlighting my point. The problem with tax policy is it doesn’t often digest easily and meaningfully into explanations that will fit in a tweet.

Oh please.  There is no such tax that makes the majority of those taxed more money.  I suppose you think businesses and industries just pay taxes out of their own profit margin and keep consumers insulated from their increased operating costs.  Transmitting those extra costs down the line to the consumer in increased prices would never occur?  There is no such thing as a "corporate tax", just like there is no such thing as a tax that affects only business and industry.  Those costs are always transmitted to the consumer.   

 

[mariomike]

Saw this from 23 Dec., 2019 regarding carbon tax in Ontario,

Dec. 23, 2019
St. Catherines Standard

Ford began the year warning of storm clouds ahead. "I can tell you that a carbon tax will be a total economic disaster," he declared in a keynote speech last January. A "job-killing tax" would devastate the country: "I'm here today to ring the warning bell that the risk of a carbon tax recession is very real." Bank economists laughed off the premier's reckless hyperbole, and even Ford ultimately renounced his hysteria. By year's end he reverted to boosterism, boasting of Ontario's steady economic growth and an unemployment rate at the lowest level in a generation, both inherited from the previous government.

As spring beckoned, the premier exhorted motorists to fill up before their pocketbooks were drained on April 1: "Today's the last day to fill your gas tank before the federal carbon tax makes life more expensive for your family," Ford warned. "We'll keep fighting to stop this terrible tax with every tool at our disposal." In fact, average Toronto prices soared from 114.7 cents a litre to about 130 cents that month — due mostly to global oil price swings that dwarfed the 4.4 cents a litre attributable to a federal carbon levy. Indeed, by June, prices were right back at about 114 cents a litre — even with the levy factored in — later falling to as low as 110 cents a litre in September and again this month (before rising again before the Christmas holiday).
https://www.stcatharinesstandard.ca/opinion-story/9788027-doug-ford-s-top-7-flip-flops-of-2019/

 

[Remius]

Oh please.  There is no such tax that makes the majority of those taxed more money.  I suppose you think businesses and industries just pay taxes out of their own profit margin and keep consumers insulated from their increased operating costs.  Transmitting those extra costs down the line to the consumer in increased prices would never occur?  There is no such thing as a "corporate tax", just like there is no such thing as a tax that affects only business and industry.  Those costs are always transmitted to the consumer. 

Well it is a user based tax.

My house is heated with natural gas.  Electricity is hydro or wind powered.  The only fossil fuel I use is gas for my car.  I did purchase one of the best fuel efficient cars in its class.  And I avoid filling up when gas prices are more expensive.  I just bought a house a year ago and I assure you I would have not even looked at houses that were heated with oil.

So in my case yes, I made more with the rebate based on my use of carbon than I likely spent. 

The point of the carbon tax and the rebate is to reduce the use of fossil fuels.  It isn't about saving or making money it is about discouraging people from using something. 

This article on Global explains it quite well.

https://globalnews.ca/news/5125670/how-the-carbon-tax-works/

Now, you are not wrong that some companies will dump their costs to the consumer for things like food and what not.  But smart companies and some are already doing this are looking to alternatives to become more competitive. 

Do I think the rebate will be repealed at some point.  the cynic in me believes so.  but hopefully by then people will already have a better mindset and should not affect them. 

 

[brihard]

Oh please.  There is no such tax that makes the majority of those taxed more money.  I suppose you think businesses and industries just pay taxes out of their own profit margin and keep consumers insulated from their increased operating costs.  Transmitting those extra costs down the line to the consumer in increased prices would never occur?  There is no such thing as a "corporate tax", just like there is no such thing as a tax that affects only business and industry.  Those costs are always transmitted to the consumer. 

It’s generally going to work better if you address claims I’ve actually made.

Certainly, costs will be passed to consumers. Maybe the best simple example would be gasoline: gas costs go up. What happens long term? Consumption patterns shift. People but more economical cars. Companies see this and develop more economical cars. Realistically we’re already into the last generation where the internal combustion engine will dominate personal/commuter travel. Not just users like you or I, but business, transit companies etc also look towards more efficient options. Consumption patterns shift away from fossil fuel use. And yes, at the individual level - you or I or others in this thread - rebates will in many cases exceed what we pay out; the greater. Most of the costs are born by more carbon-intensive production and transport cycles and those who choose to you them. You can still buy the F-350 if you want; feeding it will just cost more.

That’s of course a ‘blunt force’ example. Microeconomics being what it is, much of the impact on supply chains and production processes will be subtle and gradual- substituting a new type of plastic here; modifications to logistics infrastructure there...

All that said, and back to the origin of this conversation in tomohawk6’s post- no, carbon pricing is not gonna wreck the economy or likely do any real harm at all, including killing jobs. BC has had carbon pricing in place for over a decade and are our fastest growing economy. It’s a public policy option - one that the literature shows is generally pretty effective at stimulating more environmentally friendly choices and disincentivizing greater pollution. It’s by no means a be all end all, it’s just one tool in the tool box. Like any tax it will, yes, impose a little bit of friction on the circulation of capital. But nothing suggests it will be much, or that there will be net harm resulting.

 

[Humphrey Bogart]

Well it is a user based tax.

My house is heated with natural gas.  Electricity is hydro or wind powered.  The only fossil fuel I use is gas for my car.  I did purchase one of the best fuel efficient cars in its class.  And I avoid filling up when gas prices are more expensive.  I just bought a house a year ago and I assure you I would have not even looked at houses that were heated with oil.

So in my case yes, I made more with the rebate based on my use of carbon than I likely spent. 

The point of the carbon tax and the rebate is to reduce the use of fossil fuels.  It isn't about saving or making money it is about discouraging people from using something. 

This article on Global explains it quite well.

https://globalnews.ca/news/5125670/how-the-carbon-tax-works/

Now, you are not wrong that some companies will dump their costs to the consumer for things like food and what not.  But smart companies and some are already doing this are looking to alternatives to become more competitive. 

Do I think the rebate will be repealed at some point.  the cynic in me believes so.  but hopefully by then people will already have a better mindset and should not affect them.

It's a false rebate because you are going to be paying more for goods and services elsewhere so calling it a rebate is a misnomer. It is a social tax though with the purpose being to encourage behaviour and in that respect it may fulfill its purpose at the cost of something else.

My biggest worry with more taxes (which the present Regime seems to love) is the already precarious position many Canadians are in with respect to household debt. Insolvencies are at their highest rate in a decade and the Bank of Canada is basically hemmed in at the moment with respect to interest rates.  The worst part is much of the debt is held in HELOCs and Unsecured Lines of Credit which are most susceptible to changes in rates because they reset automatically with changes in prime rates.

Personally, it would be highly beneficial for me if the economy were to enter a recession as a result of runaway household debt as I could definitely take advantage of the resulting dip.  An Infanteer should always pray for rain 

Edit:

To add, I don't think any tax, unless it's incredibly heavy handed, will really change behaviour all that much.  Government in Canada really isn't in the business of making drastic decisions.  We are boringly cautious in this country after all. 

That is why I don't think the carbon tax is necessary.  Any economic progress with regard to becoming more "green" would happen naturally with or without government intervention.

I also think there are more positive things the government could be doing like providing tax breaks to Green Industry Startups or access to some form of special subsidization through BDC.

 

[Remius]

Taxes can change behaviour.  Look at the foreign home buyers tax or taxes on cigarettes (mind you if you go too high you can cause people to move to illegal activity).

not saying that a carbon tax will do that but that is the goal.  Time will tell if it is effective.

This link weighs the pros a cons and shows some areas where it did work and where it did not.

https://www.economicshelp.org/blog/2207/economics/carbon-tax-pros-and-cons/

 

[Jarnhamar]

[quote author=Remius]

Now, you are not wrong that some companies will dump their costs to the consumer for things like food and what not. 
[/quote]

At least it's nothing life or death.

 

[Humphrey Bogart]

Taxes can change behaviour.  Look at the foreign home buyers tax or taxes on cigarettes (mind you if you go too high you can cause people to move to illegal activity).

not saying that a carbon tax will do that but that is the goal.  Time will tell if it is effective.

This link weighs the pros a cons and shows some areas where it did work and where it did not.

https://www.economicshelp.org/blog/2207/economics/carbon-tax-pros-and-cons/

How much it changes behaviour is open to debate.  The secondary and tertiary costs associated with that behaviour modification are also not included in this calculation.

Cigarette taxes are actually a great example of this. If you put too high a tax on something, you create a black market and subsequently you need to be able to enforce said tax which costs money and you end up spending more money than you have been with minimal return. 

That's the biggest problem with the Government's present Marijuana Dilemma.  They planned to tax Marijuana but they actually will need to spend more money than they have been because they need to shut down competitors that aren't participating in the legal industry. 

There is also the effect that these taxes usually affect the poorest amongst us the most.  A substantial majority of smokers are in the lower income brackets and taxes hit the the hardest, which in turn increases the costs on other things like social assistance, welfare, etc. 

All things to say, while behaviour modification taxes are popular with the voters because it gives the appearance that we are doing something. There are unintended consequences to these decisions.

Also, cigarette companies are no closer to going away than they were when there was no tax, in fact, they are widely profitable and are diversifying constantly.  Imperial Tobacco has a near 11% Dividend Yield and the Tobacco Industry is projected to increase in value to over $1 Trillion in the next five years.

 

[Remius]

I suppose.  Most staple products are still regulated. 

Interestingly I took a look and to be honest it looks like a whole other set of factors are affecting food prices...

https://cdn.dal.ca/content/dam/dalhousie/pdf/management/News/News%20&%20Events/Canada%20Food%20Price%20Report%20ENG%202019.pdf

 

[mariomike]

Cigarette taxes are actually a great example of this. If you put too high a tax on something, you create a black market and subsequently you need to be able to enforce said tax which costs money and you end up spending more money than you have been with minimal return. 

Is it worth the risk?

If you are convicted of possessing unmarked cigarettes you may be fined three times the tax on the unmarked cigarettes you possessed plus:
•a fine of $100 if you possessed 200 unmarked cigarettes or less
•a fine of $250 if you possessed more than 200 unmarked cigarettes but less than 1,001
•a fine of $500 if you possessed more than 1,000 unmarked cigarettes but less than 10,001
•a fine of not less than $500 and not more than $10,000 if you possessed more than 10,000 unmarked cigarettes.

In addition, if it is not your first conviction for possessing unmarked cigarettes or if you are in possession of more than 10,000 unmarked cigarettes you may be sentenced to up to two years in jail.
https://www.fin.gov.on.ca/en/tax/tt/illegal.html

 

[Remius]

How much it changes behaviour is open to debate.  The secondary and tertiary costs associated with that behaviour modification are also not included in this calculation.

Cigarette taxes are actually a great example of this. If you put too high a tax on something, you create a black market and subsequently you need to be able to enforce said tax which costs money and you end up spending more money than you have been with minimal return. 

That's the biggest problem with the Government's present Marijuana Dilemma.  They planned to tax Marijuana but they actually will need to spend more money than they have been because they need to shut down competitors that aren't participating in the legal industry. 

There is also the effect that these taxes usually affect the poorest amongst us the most.  A substantial majority of smokers are in the lower income brackets and taxes hit the the hardest, which in turn increases the costs on other things like social assistance, welfare, etc. 

All things to say, while behaviour modification taxes are popular with the voters because it gives the appearance that we are doing something. There are unintended consequences to these decisions.

Also, cigarette companies are no closer to going away than they were when there was no tax, in fact, they are widely profitable and are diversifying constantly.  Imperial Tobacco has a near 11% Dividend Yield and the Tobacco Industry is projected to increase in value to over $1 Trillion in the next five years.

I would argue that the secondary and tertiary benefits are also not being factored in by the other side either.

That is the key though.  Finding just the right price point to make it worth it or not.  I'm not sure the government has found it though.

Cigarette companies maybe profitable world wide.  I'm not convinced that they are in Canada.  And it wasn't just taxes but a comprehensive plan that included taxation.  Plus they've diversified into the unregulated vaping industry.

The marijuana issue is more about over estimating the market than taxation. 

The point is that many on both sides don't understand how the carbon tax works or what it is for.  I know plenty of people that didn't check the box for the rebate so got nothing so they think they got screwed.  They just didn't listen. 

One can be for or against but they need to understand it.  Like Quebec's "free" childcare program.  People outside Quebec who don't understand how transfer payments work or how revenue neutral programs work generally hate it.  The Carbon tax is the same sort of thing.  Macro and Micro.  The link I posted above does a good job of showing that in the pros and cons. 

 

[QV]

If a carbon tax is about changing behaviors, then why not bypass the bs and just make it illegal to buy and drive that F-350 unless for an authorized, government approved, commercial purpose?  Otherwise it seems like a very passive-aggressive way to achieve one of it's goals.  If the government doesn't think you need that pick-up truck, then maybe you shouldn't have one.  It's happening with firearms.  Why not vehicles and other heavy polluters since climate change is the existential threat of our time? 


 

 

[Remius]

If a carbon tax is about changing behaviors, then why not bypass the bs and just make it illegal to buy and drive that F-350 unless for an authorized, government approved, commercial purpose?  Otherwise it seems like a very passive-aggressive way to achieve one of it's goals.  If the government doesn't think you need that pick-up truck, then maybe you shouldn't have one.  It's happening with firearms.  Why not vehicles and other heavy polluters since climate change is the existential threat of our time? 

Well, there is also a political aspect to it as well.  Trust me, there are plenty of aspiring politicians that would love to implement exactly what you are stating.  Like anything, you have to implement things gradually or it won't take or there will be resistance to it.  Cars, firearms and lawn darts are apples and oranges and bananas though. 

You just answered your own question.  It is a much more passive way of doing it.  They should be doing it for sugar based drinks too or cars should all come equipped with breathalyzer starters or insert cause here ________.

It isn't always that simple though. 

 

[FJAG]

Is it worth the risk?

If you are a user, pretty much.

Statistics indicate that roughly 1/3 of all cigarettes in Ontario come from an illicit sources.

https://www.theglobeandmail.com/canada/article-federal-provincial-governments-target-illegal-tobacco-with-new/

And if you are a producer it's also worth it. It's a multi-billion dollar business run by organized crime with over 175 groups, through some 50 factories and with some 300 retail outlets selling roughly 3 billion illegal cigarettes each year but which has only seen some 175 arrests 2.8 million in fines and seizure of a mere 7 million cigarettes.

https://uwaterloo.ca/tobacco-use-canada/adult-tobacco-use/cigarette-sales-and-sources
https://www.ontario.ca/page/illegal-tobacco
https://globalnews.ca/news/2608297/canadas-flourishing-contraband-tobacco-market-helps-fund-overseas-terrorism-report/
http://www.imperialtobaccocanada.com/group/sites/BAT_AXYKCM.nsf/vwPagesWebLive/DO9YFE76

By anyone's measure, that's a successful business model. By a criminal business model, its phenomenal.

:cheers:

 

[Humphrey Bogart]

If you are a user, pretty much.

Statistics indicate that roughly 1/3 of all cigarettes in Ontario come from an illicit sources.

https://www.theglobeandmail.com/canada/article-federal-provincial-governments-target-illegal-tobacco-with-new/

And if you are a producer it's also worth it. It's a multi-billion dollar business run by organized crime with over 175 groups, through some 50 factories and with some 300 retail outlets selling roughly 3 billion illegal cigarettes each year but which has only seen some 175 arrests 2.8 million in fines and seizure of a mere 7 million cigarettes.

https://uwaterloo.ca/tobacco-use-canada/adult-tobacco-use/cigarette-sales-and-sources
https://www.ontario.ca/page/illegal-tobacco
https://globalnews.ca/news/2608297/canadas-flourishing-contraband-tobacco-market-helps-fund-overseas-terrorism-report/
http://www.imperialtobaccocanada.com/group/sites/BAT_AXYKCM.nsf/vwPagesWebLive/DO9YFE76

By anyone's measure, that's a successful business model. By a criminal business model, its phenomenal.

:cheers:

:nod:

Tobacco Farming is on the rebound in Ontario.

Tobacco is wildly profitable.  Big Tobacco is going to play the long game and if anyone thinks the Government is going to go after Big Tobacco, they are wrong.

JTI for instance, is 33% owned by the Japanese Government.  What is the GoC going to do to Tobacco, start stripping its assets if it doesn't pay settlements and enrage foreign governments in the process?

 

[FJAG]

:nod:

Tobacco Farming is on the rebound in Ontario.

Tobacco is wildly profitable.  Big Tobacco is going to play the long game and if anyone thinks the Government is going to go after Big Tobacco, they are wrong.

JTI for instance, is 33% owned by the Japanese Government.  What is the GoC going to do to Tobacco, start stripping its assets if it doesn't pay settlements and enrage foreign governments in the process?

When I retired in 2009 I moved to Lake Erie near Blenheim. The farms in that area were heavy into tomatoes and tobacco as their primary industries. (Pretty much every year at least one smoke barn would go up in flames). There was a bit of a die back for a few years as they switched some farms to other crops but they've been coming back pretty heavily. It's certainly not a dying industry even with the amount of illegal tobacco making its way in from China and the US.

:cheers: