The carbon tax will cost - not benefit - families

Submitted to Carbon tax

Matthew Lau with the Fraser Institute questions if the carbon tax rebate system is effective:

“Before the federal carbon tax increased from $30 per tonne to $40 per tonne (effective April 1), the Trudeau government again trotted out its talking point that under its policy, most Canadian families will receive a higher amount back in rebates than they pay for the tax, implying that the carbon tax not only improves the environment but also makes most families better off.

As Stanford economist Lawrence H. Goulder wrote, “green taxes usually are a relatively inefficient way to raise revenue: the economic cost of raising a dollar through green taxes tends to be higher than that of raising a dollar through ordinary income taxes.” Because they are, by design, imposed on a narrower base than income taxes, green taxes “imply larger ‘distortions’ in markets.”

Meanwhile, rebates do not mitigate the distortionary effect of carbon taxes because rebates are handed out in lump sums. The result of the policy, therefore, is to reduce economic growth and family incomes. At bottom, when correctly accounting for all costs of the federal carbon tax, it clearly produces a net financial loss to Canadians. And for most families, it’s doubtful that the rebate will exceed the costs of the tax.”

How does the carbon tax rebate system help your family, or does it?