Carbon pricing, as nice as it sounds, is still just a tax

Canadians are being asked to outpunch our bodyweight in taxes to address a global warming problem which we have an absolute miniscule ability to control. | File photo

The world, justifiably, is concerned about global warming. Environmentalists have placed the blame firmly on our use of fossil fuels, with partial justification.

There is rarely mentioned other scientific contributors to changes of this condition. The one that is never-mentioned as the greatest carbon balancing act is called carbon-absorbing sinks, namely, forests.

Many parts of the world have been clear cutting them across South America, northern Europe and elsewhere and this is rarely mentioned as a contributing factor. It is estimated 25 percent of those forests will never be replaced, more in some areas.

Most recently, the Canadian Supreme Court endorsed the federal government’s argument establishing carbon pricing as solely in federal jurisdiction supporting global warming as a superseding argument.

The frequent argument in favour of carbon pricing is that Canadians have a role to play in mitigating global warming — true.

The last time we looked, however, we are a country of 37.5 million fuel consumers and have no significant way of controlling global climate — although our 318 billion trees (the second largest forested carbon sink in the world after Russia) does make a positive difference.

Global climate is just that, global, and our southern neighbour with a population of 330 million fuel consumers, along with China and India with 1.4 and 1.35 billion, respectively, just might have a greater impact.

Canada sells about 1.75 to 1.9 million new cars each year. The lifespan on these vehicles is 13 to 17 years. They will need fuel. The United States sells almost 19 million new cars per year with comparable lifespans. That means an additional fuel tax/financial burden, through no fault of their own, will fall on those owners until alternative fuel sources are available, at which time they will have lost all or most residual trade-in value of their vehicle.

The average number of global electric vehicle (EV) sales in 2019 was just 2.6 percent.

Amazon Prime, committed to converting its sizable delivery fleet to electric, is targeting 2040 as its completion date.

The Chevrolet Cruze and Volt were twin fuel and electric offerings (both discontinued) but electric had a $14,000 higher sticker price. At $2 per litre regular fuel (about 30 to 40 percent higher than it is now) it would take you five to seven years to recoup the premium on your EV. That kind of purchase point is a major barrier to low and medium-income wage earners.

The environmental argument against carbon fuel (which represents a significant portion of Canadian and even more so western and Atlantic economies) does not project when alternative power sources will reach a tipping point to outweigh fuel consumption.

Exceedingly optimistic estimates would be somewhere after 2040. So, Canadians are being asked to pay higher taxes and consumer costs until then.

One example is that carbon pricing will increase some of the costs of produce leaving the farmgate as well as adding shipping costs to processers, warehousing and retail. However, many primary producers don’t control the price of their output and will have to eat increased costs of farm inputs.

The impact of increased costs to already narrow profit producer margins could be financially catastrophic. It will also reduce our ability to compete with our main trade rivals, including the U.S.

The issue is far more complex than our government leaders and environmentalists are letting on. There is no quick fix but Canadians, as much we wish to make this a better world for our children and grandchildren, are being asked to outpunch our bodyweight in taxes to address a global warming problem which we have an absolute miniscule ability to control.

Grant Diamond is a tax analyst in Saskatoon, SK., with FBC, a company that specializes in farm tax. Contact: fbc@fbc.ca or 800-265-1002.

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