Sunday, June 22, 2008

Carbon Tax Swindle — More Taxes, Higher Prices

Finally the numbers are in. Finally we know that if implemented, the carbon tax will start at $10 per tonne, increasing gradually over 4 years until it reaches $40 per tonne. Applying this price to the calculation example in Wikipedia gives us the following fuel levy per litre: $0.094 for gasoline, $0.108 for diesel and $0.102 for jet fuel.

Sure, Dion has promised to eliminate the existing 10-cent excise tax on gasoline to compensate for the 9.4 cents per litre carbon tax. But no such promise was made for diesel fuel. Thus shipping gasoline will cost more. Producing gasoline too is going to be more expensive. Therefore even without the new direct tax on gasoline, the price of gas will go up.

Expect higher heating bills since carbon tax will also apply to propane and heating oil. Your hydro bills too will go up - depending on the energy source, the carbon tax will be ranging between 2.13 and 4.13 cents per kilowatt-hour. Natural gas will be taxed at 7.75 cents per cubic meter. Planning a vacation? You'll have the carbon tax on top of the fuel surcharges that are already there...

But what about the tax cuts that are supposed to offset the effect of carbon tax? The numbers are in; recalculating the percentages into the actual rates gives us the following scenario: The lowest 15% tax rate will be reduced to 13.5%. The two middle rates (22% and 26%) will be reduced by 1 percentage point - to 21% and 25% respectively.

Thus, an individual with a $37,885 income will be saving about ~$370. A single income family that makes $75,769 will be saving ~$600 less $30 for every child they have. Will that be enough to offset higher heating and hydro bills? Will that be enough to offset higher shipping prices which the businesses are going to pass along to the consumers?

Rebates? Don't hold your breath. If those rebates are calculated using the same formula as the GST credits, then neither the individual nor the family I brought as example will qualify. So, with the numbers handy it's obvious that we have a green tax swindle rather than a green tax shift. Ladies and gentlemen, watch your pockets!

3 comments:

Scruffy Dan said...

"the price of gas will go up..."

That's supposed to be the point.
http://www.cbc.ca/quirks/archives/07-08/sep29.html#4

http://en.wikipedia.org/wiki/Pigovian_tax

Leonard said...

At least you are honest - you say it right away that the carbon tax is there to drive the gas prices up. But Dion keeps claiming that the carbon tax will merely replace the existing excise tax (without mentioning the higher production and shipping costs), so he promises that gas prices won't increase.

Leonard said...

P.S. Pigovian tax, eh? How about this link then?

http://stevejanke.com/archives/227556.php