We already pay a vast carbon tax

TheGlobeandMail.com – columns – We already pay a vast carbon tax
July 8, 2008. JIM STANFORD

Q uestion: When is a carbon tax not a carbon tax?

Answer: When it’s collected by corporations (instead of governments) and the revenues go to investors (instead of services and infrastructure).

Never mind the hand-wringing over B.C.’s mild-mannered new carbon tax and similar proposals from the federal Liberals and Greens. Those taxes, ranging from a first tranche of $10 a tonne of carbon dioxide in B.C. to an immediate $50 a tonne for the Greens, just skirt the edges of the tectonic changes in today’s energy markets. They’ll spark modest changes in energy prices (the Liberal plan excludes gasoline) and consumer behaviour.

Where carbon taxes are concerned, the motto should be “Go big or go home.” And Canada’s petroleum industry has learned this lesson well.

Consider the following math: It takes about 430 litres of gas to emit a tonne of carbon dioxide. The price of gasoline in Canada has risen by 50 cents a litre in the past 18 months. That’s the equivalent of a new tax of $215 a tonne of carbon dioxide. The vast majority of that goes straight to the petroleum industry.

In other words, the astronomical prices we currently pay for fossil fuels constitute a “carbon tax” five to 20 times larger than those proposed by green-tinged politicians. Yet, unlike the Liberal or Green plans, this carbon tax hasn’t been debated in any parliament. No radio ads denounce the harm to consumers. And the Conservatives don’t just rubber-stamp this tax, with their non-existent energy policy – they actively reward it with corporate tax cuts.

Industry apologists, of course, say this is not a tax. Sky-high prices reflect supply and demand in energy markets, which somehow makes them natural and fair.

Hogwash. We know why global prices are high. There’s this little matter of OPEC, an international cartel. Fear of war in the Middle East. The impact of hedge funds and other speculative pressures on oil futures. None of it reflects economic “fundamentals.”

And none of it explains or justifies why we pay the same absurd global prices for our own resources. After all, Canada produces 50 per cent more oil than we use. It’s been there for gazillions of years; it’s no more scarce or expensive to extract than it was 18 months ago. (The only new cost facing oil producers is inflation resulting from their own mad rush to develop all of northern Alberta at once.) Canadians spend $30-billion more a year on fossil fuels than they did a decade ago – and that doesn’t count the energy inflation reflected indirectly in everything else we buy. We’re forking over vast sums not because it’s economically necessary or efficient, but because those collecting the money have power. That sounds like a tax to me.

The issue is not whether carbon-based energy will become more expensive. It’s already expensive. That will encourage some conservation. The real issue is who gets to collect this carbon tax – whatever we call it – and what the money is used for. The first step should be wresting more control over what we already pay.

Let’s impose an excess profits tax on petroleum producers, to capture back just some of the tax they already collect.

We’ll start at $50 per tonne, which works out to something like $15 to $20 a barrel – a fraction of the current price. Then let’s use the money to fund more powerful environmental measures: energy conservation and conversion, support for green industries, catching up to the Europeans on alternative energy.

Think about this the next infuriating trip you make to the gas station, paying $80 to fill your tank. By all means, express your view about carbon tax proposals that would add less than $5 to that toll.

But also take a few moments to think about the much bigger tax you already pay to the oil industry. Maybe that’s what we should be debating.

Jim Stanford is an e conomist with the Canadian Auto Workers union.

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