Canadian Liberal Leader, Dion, pitches Carbon Tax Plan

[Every Breaking Wave]

Source

Lower and middle-income Canadians would see their income taxes reduced by up to 10 per cent under the "green shift" to be unveiled Thursday by Stephane Dion, The Canadian Press has learned.

The substantial tax reductions are designed to offset the cost to consumers of the Liberal leader's proposed carbon tax - and to make the politically risky plan more palatable to voters.

According to party insiders, the shift would impose a tax of $10 per tonne of greenhouse gas emissions in the first year, rising to $40 per tonne in the fourth year.

The tax, which would be applied at the wholesale level, is expected to generate up to $15 billion per year in revenue by the fourth year.

But Dion is promising to return every penny of that windfall back to Canadians through offsetting personal income and corporate tax cuts. And he's promising to pass legislation requiring Canada's auditor general to review the tax shift annually and verify whether it lives up to its advance billing as revenue neutral.

Among the tax measures, insiders say Dion's plan would reduce the tax rate for Canadians in the lowest tax bracket to 13.5 per cent from 15 per cent. That amounts to a 10 per cent tax reduction.

The tax rate for the two middle tax brackets would be cut by one percentage point, to 21 per cent and 25 per cent. That would amount to a tax reduction of five and four per cent respectively.

No reduction is proposed in the top tax rate for high-income earners.

Dion will also propose reducing the corporate tax rate but insiders said the bulk of the tax cuts are aimed at individuals.

The plan will also include a host of measures to help shield those who pay little or no income tax from the impact of the carbon tax, which will push up the cost of diesel, home heating fuel and electricity. It will not include any additional tax at the gas pumps and will exempt those whose livelihoods are dependent on fossil fuels, such as diesel truck drivers and airlines.

Dion's previously announced commitment to reduce poverty by 30 per cent in five years will be wrapped into the green shift plan and will include measures to enrich the working income and child tax benefits, extending the child tax credit and raising the Guaranteed Income Supplement for the poorest seniors.

Insiders say Dion intends to candidly admit that his plan will entail additional costs for consumers. The plan estimates that the average Canadian family will pay an additional $60 in direct costs during the first year, rising to $250 by the fourth year.

Moreover, the plan acknowledges there will be additional indirect costs as industry passes on the carbon tax to consumers.

Still, insiders insist that by the fourth year, middle and lower-income Canadians will be "way better off" under Dion's plan that they are today.

That didn't deter Conservatives Wednesday from continuing their barrage of attacks on Dion's plan, which they've been depicting for weeks as a massive "tax on everything," even before seeing the details.

In the Commons, Tory MP Cheryl Gallant said a carbon tax is "nothing more than a yuppie fad" that will punish poor, rural and working class Canadians.

Another Tory MP, Rick Dykstra went so far as to suggest the carbon tax will force the country into "a wall of darkness."

"Canadians would be lighting candles, turning on light switches and cursing the Liberals because if the Liberals passed their permanent tax on everything, Canadians would be paying more every time they turned on the lights."

Multiculturalism Minister Jason Kenney quipped that if Dion were to succeed with his green tax shift, "Canadians will be shift out of luck."

Liberal environment critic David McGuinty dismissed the Tory attacks as a sign of fear. He said they know Canadians are hungering for a "thoughtful, sincere, coherent" plan to combat climate change and help Canadians adjust to the inevitability of soaring energy prices and dwindling supply of fossil fuels.

Green party leader Elizabeth May, meanwhile, pre-empted Dion, unveiling Wednesday her own proposal for a carbon tax. Her plan would impose a tax on carbon at a rate of $50 per tonne and it would apply more broadly than the Liberal plan, including at the gas pumps.

Liberals were quietly pleased with May's timing, hoping that it would make Dion's plan seem, by comparison, more moderate and reasonable.

McGuinty called May's carbon tax "excessive" and out of step with carbon prices in Europe and what is likely to be imposed in the United States.

By contrast, he said the Liberal plan "is going to be a very middle-of-the-road and very, very realistic plan going forward."

 

[I Started A Cult]

Can you say "bonkers"? I thought you could!

 

[Fig]

I could say it, but I don't see why I should.

 

[I Started A Cult]

Whenever you breath out, what do you emit,? Carbon! What is this person trying to impose a tax on? Carbon. So basically, this person is attempting to propose a tax on exhaling.

 

[Every Breaking Wave]

It's not an uncommon idea; carbon taxing has been mentioned multiple times before in Canada, and I'm sure in the wider world too. It's not about taxing people for breathing, it's taxing them for polluting. The tax is $10 per ton(ne) of carbon emitted; hardly taxation based on respiration.

 

[I Started A Cult]

But I still think that this is nuts. How are they even going to measure how much carbon is emitted?

 

[Exxthus]

Using the same methods that they use for calculating carbon emissions in the first place, I'd imagine. I don't see it as a bad idea at all, what with the whole Kyoto Accord incident.

 

[Fig]

Indeed. You can generally get a good idea how much oil someone burn, and the amount of carbon emited per gallon of oil burned is fairly well known as well.

Besides which, the plan sounds like it's targeting mostly corporations, not individuals, and with relief plans to help offset corporate attempts to "pass down" the tax to individuals.

 

[Every Breaking Wave]

Yes, including a series of income tax cuts for the residential level.

I want to make it clear that individuals will not be paying more at the pump (we already pay more in tax there than we would in the carbon tax) or for groceries.

We can probably expect the oil-rich West to be against this plan though...