Carbon tax flim-flam
The all-in-one package is in a report by Prof. Jaccard, of Simon Fraser University, for the David Suzuki Foundation. Titled Pricing Carbon: Saving Green, the report ran through some economic modelling exercises to see what might happen if Canada were to impose a tax on all carbon emissions of between $75 and $200 a tonne by 2020. Before any government gets to assessing the report — which doesn’t mention that a $200-a-tonne tax would raise the price of gasoline by about 50% to $1.60 a litre; nor does it do much to highlight the $45-billion in annual lost growth by 2020 — we suggest a tracking device be attached to Mr. Jaccard to monitor his role in the rise of carbon tax on the Canadian agenda.
When B.C. Finance Minister Carole Taylor’s budget last week announced a version of a carbon tax, Mr. Jaccard and his private research company, M.K. Jaccard and Associates, were the only authorities named. The B.C. plan, moreover, contained all the propaganda tricks Mr. Jaccard raised in the Suzuki version. The tax would raise billions, but voters should not worry because it would be “revenue neutral” and would be “recycled” back in tax cuts or direct payments. As a marketing ploy, the B.C. government said it would immediately send out $440-million in Carbon Tax Credit cheques to citizens, before the carbon tax was even imposed.
In his Suzuki report, Mr. Jaccard begins with a pithy epigraph: “The atmosphere can no longer be considered a carbon dump.” Turns out Mr. Jaccard is quoting himself and his coauthors, including one Jeffrey Simpson, from their book Hot Air. While short and emphatic, the quote is also pure rhetoric unhindered by fact. The atmosphere will continue to used as a dump so long as humans are allowed to exist.
Then the Suzuki report says that “several recent studies” show that a price on carbon is the best way to cut carbon emissions. Of two studies cited, one is from Mr. Jaccard. Reference is later made to recent carbon-tax research by the National Round Table on the Environment — research Mr. Jaccard had a hand in.
The progress of the carbon tax idea to yesterday, including the joint conference with Mr. Suzuki and the B.C. budget carbon tax gimmick, shows Mr. Jaccard has a way with policy makers, politicians and activists. So far he’s made no headway with the Harper Tories or Finance Minister Jim Flaherty, whose budget today was clearly the focal point behind the timing of these events.
The Jaccard carbon tax studies are gigantic exercises in economic modelling. Using models Mr. Jaccard controls, the study asks what would happen to the economy 12 years from now under different levels of carbon taxation and methods of government disposal of the cash raised. If the tax were $100 a tonne, governments would raise $62.5-billion; at $200, the tax take is $100-billion a year — three times what the government collected last year in GST. That would be bad for the economy, depending on how the government spent it. It would reduce carbon-based energy consumption, hurting growth. But if the government took that money and “recycled” it back into the economy in beneficial ways, the bad impact of the tax would be neutralized.
The Suzuki report spends a lot of time ventilating the idea that there might be a “double dividend” in a carbon tax. Bring in a tax, the government recycles it back to taxpayers, and then everybody collects an environmental dividend. In the end, though, the report concedes (most clearly in a footnote) that there is a growing consensus in economics that the prospect of such a double dividend is “weak.”
The Suzuki-Jaccard study is premised on the theories of Arthur C. Pigou, a 20th-century economist who believed you could use taxes to change behaviour. Mr. Jaccard calls his tax the “Pigovian carbon price.” The trouble with Pigovianism is that it requires revival of the ancient and discredited economic art of central planning, using taxes as substitute for prices. But a tax is not a market price. It’s a bureaucratic planning device–as Mr. Jaccard’s elaborate economic modellings prove. And it’s no way to run a market economy.