Wednesday, October 10, 2018

Why do people hate carbon taxes, and why are they wrong?

Further to my last blog entry (The fight against climate change is going through a scary lull), I got to wondering just why there is such opposition to carbon taxes.
An Ipsos poll earlier this year suggests that, in my own province of Ontario, some 72% of people think that carbon taxes are just a tax grab, and 68% see them as merely a symbolic gesture and not truly effective as a means of reducing greenhouse gases. And it is not only traditional conservative voters who think this: although 85% of Conservatives believe carbon taxes to be a tax grab, 72% of NDP votes and 54% of Liberal voters do too.
So, why do so many people dislike (even hate) the idea of a carbon tax. Well, one study suggests that the main reasons are: a general objection to the more coercive aspect of taxes in general; the perception that carbon taxes are regressive and disproportionately impact low-income households; a belief that carbon taxes aren't actually effective in reducing greenhouse gas emissions; and a distrust of governments' motives and a belief that carbon taxes are just a backdoor way of filling governments' coffers.
The recent crop of populist politicians, from Donald Trump to Doug Ford to Jason Kenney and beyond, have made good, if somewhat cynical, use of these beliefs and used them to stolen the fires of opposition to carbon taxes in general. And yet all of these objections are either mistaken or can easily be addressed by a well-designed carbon tax.
There is a very good economic and environmental case to be made for carbon taxes, even under a conservative ideology. Most carbon tax plans are merely a redistribution of taxes rather than a tax grab, and recycle any tax deducted on carbon back to the people. This year's winners of the Nobel Prize in Economics back carbon taxes as the best solution to climate change without resorting to straight regulation. The OECD has concluded that carbon taxes are the fairest and most cost-effective method of reducing greenhouse gas emissions, and economically preferable to other options such as feed-in tariffs, industry regulation or subsidies.
As the World Resources Institute points out, a carbon tax is is intrinsically neither progressive nor regressive, but can be designed to positively benefit the poor and middle class elements of society. Stephen Harper's former policy director argues that most people would actually get more back from tax redistribution than they would lose in carbon taxes, and that low-income families actually stand to benefit the most. Hell, carbon taxes were an integral part of the Ontario Conservative Party's platform before Doug Ford got hold of it!
So, notwithstanding the cynical and extremely effective manipulation of the issue by populists, what it comes down to is that carbon taxes have been poorly explained and publicized to the general public. But then I remember writing something very similar several years ago, so why have we not learned?

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