If the Conservatives are going to replace the Liberals in the next federal election, they need a credible plan to address carbon emissions. Cancelling the perverse carbon tax is a popular idea in much of the country, but urban Canadians don’t want to be left without a plan to cut emissions.
Conservative leadership hopefuls are no doubt strategizing on how to address the climate change issue in a way that has wide appeal. Here’s an idea for them.
Raise the GST from the current five percent to six percent and earmark the billions of dollars a year from that one percent change to projects and incentives that will cut carbon emissions. Let’s call it the GST carbon tax surcharge. It would be a far superior approach for a number of reasons.
Most importantly, it wouldn’t handicap Canadian industries including agriculture as they try to compete for sales in the world market. Businesses, including farmers, receive GST input credits for goods and services consumed in the course of their commercial activities, so it isn’t a drag on business competitiveness.
And since the filing of GST returns is just a normal part of doing business, no extra administration would be needed. The same zero-rated items would remain including groceries and prescription drugs. As well, low income Canadians are eligible for GST rebates so they would not be disadvantaged by the one percent increase.
When it was first implemented by the Brian Mulroney government in 1991, the controversial GST was seven percent. It replaced the hidden manufacturers’ sales tax that was a hindrance for export competitiveness, much like the current carbon tax.
In many provinces, the GST is harmonized with provincial sales tax.
The money from a one percent increase could be earmarked for a host of initiatives. No doubt, there would be arguments over the best uses for the funds, but it would seem reasonable to support high efficiency furnaces, better insulated homes and commercial buildings, public transit and carbon sequestration by agriculture and forestry.
Electric cars, solar panels and wind energy might also be part of the mix, but they should be evaluated and supported based on a cost-benefit analysis rather than just emotion.
In recognition that Canada has only 1.6 percent of global greenhouse gas emissions and we can’t solve a worldwide issue by ourselves, climate adaptation initiatives could also be funded. And we could fund research into energy alternatives that could have a global impact.
The current carbon tax isn’t doing anything to reduce emissions and it won’t change consumption patterns unless it’s raised to a ridiculously high level. However, the tax is hurting agriculture and all the other export-oriented industries and therefore harming the overall economy.
A GST carbon tax surcharge wouldn’t hurt businesses. Any drag on the overall economy would be balanced by investing the money in tangible initiatives.
Canada needs a workable carbon reduction plan and this one makes a whole lot more economic sense than what we’re doing now.
Kevin Hursh is an agricultural journalist, consultant and farmer. He can be reached by e-mail at email@example.com.