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Not crying over lost revenue

Toronto Sun

19 October 2018

Re “Bad deal either way” (Lorrie Goldstein, Oct. 17): Sure the government will forgo $3 billion in revenue by cancelling cap-and-trade, but how much tax revenue did Ontario lose and would have continued to lose as businesses and the jobs they provide moved to jurisdictions without any tax on carbon emissions? It’s economic suicide to have a tax on carbon when our neighbour and closest trading partner, the U.S., doesn’t have one. Of course, an inconvenient truth for those crying over this “lost revenue” is that we all know this “new-found” money would likely have been thrown down the general revenue black hole, spent on things we don’t really need to fund, rather than spent on things we really need like health care (including senior care), schools, or the many underfunded infrastructure and social obligations all levels of government have on their plates. Bottom line, scrapping a job-killing tax that would have zero impact on the environment is not something I will cry about. Keep cutting our taxes and spending our money wisely, Premier Ford.

 

(And that’s just what he’s doing. But we need to also be good stewards of the environment and not lose sight of that)

 

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The Toronto Sun column that inspired my column:

For Ontario, cap-and-trade was a bad deal

Ontario Financial Accountability Officer Peter Weltman’s report on the financial implications of Premier Doug Ford cancelling former premier Kathleen Wynne’s cap-and-trade scheme revealed two things.

First, Wynne’s plan was a terrible deal for taxpayers.

Second, Prime Minister Justin Trudeau’s looming carbon tax on Ontario, now that we don’t have a carbon pricing plan, is even worse.

Weltman reported with Ford killing Wynne’s cap-and-trade scheme, the Ontario government will take a $3 billion hit to its bottom line between 2018-19 and 2021-22.

That’s because the loss of revenue to the government from cap-and-trade, which, let’s remember, would have been paid for by all of us in higher consumer prices, is $7.2 billion.

To that, Weltman adds $600 million in windup costs for a total cost of $7.8 billion, $3 billion short of the $4.8 billion in savings he estimates from cancelling the programs cap-and-trade was going to fund.

The reason for this is that some cap-and-trade initiatives funded infrastructure programs that will not provide immediate savings, plus about $500 million in programs for this year that weren’t cancelled.

What the FAO doesn’t address is whether Wynne’s scheme would have delivered value for money.

That is, would the billions of dollars Ontarians were paying for cap-and-trade have been effective at lowering industrial greenhouse gas (GHG) emissions?

Auditor General Bonnie Lysyk assessed that in her 2016 annual report and her findings were damning.

She concluded the $8 billion Wynne planned at that time to spend on cap-and-trade over four years would achieve less than 20% of the emission cuts the Liberal government was promising for 2020 — 3.8 megatonnes compared to an 18.7 megatonne target.

Lysyk said the rules for trading emissions in the then looming Ontario-California-Quebec carbon market were so unclear, they could result in emission cuts being double counted.

And that there was no way of knowing whether billions of dollars in additional payments made to industries in California and Quebec, would actually lower emissions.

That’s why cap-and-trade was a terrible deal for Ontarians.

The new bad news from the FAO’s report is that in the absence of cap-and-trade, the carbon tax Trudeau will impose on Ontarians, starting at $20 per tonne of emissions next year, rising to $50 per tonne in 2022, is worse.

Weltman estimated while the annual cost of Trudeau’s carbon tax to the typical Ontario household would be slightly less expensive than cap-and-trade in 2019, ($258 vs $264) by 2022 Trudeau’s carbon tax will cost the average household $648 annually, more than double $312 for cap-and-trade.

And we will pay that money, according to every credible study of Trudeau’s carbon pricing plan, as part of a national carbon pricing scheme that will come nowhere close to meeting Canada’s emission targets.

Trudeau says that, assuming the Ford government loses its legal challenge of his carbon tax, it will be revenue neutral, returning all the money raised to Ontario taxpayers.

I preferred former Progressive Conservative leader Patrick Brown’s strategy, which would have scrapped Wynne’s cap-and-trade scheme and replaced it with a made-in-Ontario, revenue neutral carbon tax, with the auditor general confirming annually that all of the money raised would be returned to taxpayers.

As it is, if Ford’s legal strategy doesn’t work, then we have to rely on Trudeau to keep his word. Bad idea.

About the author

Bruce Forsyth

Bruce Forsyth served in the Royal Canadian Navy Reserve for 13 years (1987-2000). He served with units in Toronto, Hamilton & Windsor and worked or trained at CFB Esquimalt, CFB Halifax, CFB Petawawa, CFB Kingston, CFB Toronto, Camp Borden, The Burwash Training Area and LFCA Training Centre Meaford.

Permanent link to this article: http://militarybruce.com/not-crying-over-lost-revenue/

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