In the Calgary Sun Kenneth Green of the Fraser Institute writes that Canada’s carbon tax is not by the textbook. For one thing, revenue neutrality is a political not an economic criterion; economists want the money from carbon taxes used to reduce other, inefficient taxes like corporate or personal, not handed out to pacify voters. Second, “economic theory calls for carbon taxes to replace regulation, not be layered on top of regulation.” And third, you need either international coordination or taxes and rebates at the border to punish carbon-intensive imports and rebate exports to nations without them. Canada’s carbon tax, it seems, was designed by people who don’t understand economics. How odd.
Public debate on any number of issues divides into warring camps as hostile to nuance as to one another, it seems. And too often politicians as well as zealots are just as ill-informed as they sound. But when, for instance, we’re told Nobel Prize-winning economists support a carbon tax like the one the Trudeau Liberals devised, it matters that they don’t.
As McGill economist William Watson recently noted, the idea that carbon taxes should be paid by corporations is also not supported by William Nordhaus, the Nobel Prize winner most often associated with carbon taxes. It is the users who will pay if the tax is effective.
If you think we need to stop GHG emissions, or cut them sharply, to save the planet, our civilization or the polar bears, you ought to care a lot more about designing the tax properly than about winning a short-term PR battle. So do your homework about what the economists actually say, then come back and discuss it in a calm tone of voice.