5:42 am
September 11, 2013
Alexandre, I believe you would have to take into account the higher prices that couple pays whenever they spend a dollar (due to the passing on of embedded carbon tax costs by every private or public sector goods and services provider) in your analysis. I think it's a little more complex calculation than some political parties want you to believe.
5:48 am
March 30, 2017
Bill said
Alexandre, I believe you would have to take into account the higher prices that couple pays whenever they spend a dollar (due to the passing on of embedded carbon tax costs by every private or public sector goods and services provider) in your analysis. I think it's a little more complex calculation than some political parties want you to believe.
That is very true. Every purchase has some sort of carbon tax embedded in the final price that consumers pay, be it groceries or eat out, even tho some spend categories may not be obvious.
6:12 am
April 27, 2017
Norman1 said
BlueSky said
Let's face it, a government is not in the business of losing money. Clearly, they have collected much more from taxing Canadians than paying a "rebate". Now, if carbon taxes fixed world pollution, great! But, it won't, because Canada is not isolated by a wrapped bubble from the rest of world. …
That's false multiple times.
The carbon tax is revenue neutral to the federal government. 90% of the carrbon tax is returned to consumers through rebates. 10% is returned to businesses, schools, municipalities. CBC Explain: Carbon tax change has Canadians asking about the program. explains how it works.
The article also explains how the carbon tax is not neutral to every individual. That's obvious when one looks at the rebate calculation. People are not required to provide litres of gasoline, litres of heating oil, or BTU's of natural gas purchased.
Carbon taxes sensitize people to the price of carbon emissions. That's a good idea. It's not going to stop pollution completely. 14¢ per liter extra on gasoline is not going to stop anyone from driving. At 9L/100 km, that's about $1.25 per 100 km or about $0.63 per 50 km round trip commute. The 63¢ is peanuts compared to the time saved driving instead of taking public transit.
Carbon tax is not “revenue neutral” for farms. I know it for a fact. The impact on consumers is complex and would require an economic study to evaluate. Farmers don’t have an alternative to carbon fuel. In some cases they can pass the costs on to consumers. In other cases the price is set (eg in Chicago) and the only option a farmer has is to cut production, switch to “eco-tourism”, etc. In this case Canadian produce gets replaced by imports.
In other words, government taking money from Bob and then giving the same amount to John has other pricing impacts, which are complex and not in any way or shape neutral to consumers. One thing is clear: they are inflationary.
6:35 am
November 8, 2018
savemoresaveoften said
Rebate means one spend something, then get something back.
The carbon tax rebate is set up to reward those who dont generate much carbon for whatever reason, but its certainly NOT a rebate.
also
Every purchase has some sort of carbon tax embedded in the final price that consumers pay, be it groceries or eat out, even tho some spend categories may not be obvious.
I am confused now: have I been rebated for spending on groceries, gasoline and natural gas heating with carbon tax embedded, or its certainly NOT a rebate?
6:39 am
November 8, 2018
mordko said
In other words, government taking money from Bob and then giving the same amount to John has other pricing impacts, which are complex and not in any way or shape neutral to consumers. One thing is clear: they are inflationary.
Apologies, but it is not clear for me how the government triggers inflation by taking $100 from Bob and giving that same $100 to John?
Suppose, I took $20 out of my pocket and gave it to mordko voluntarily. Have I just contributed to inflation?
Or is it inflationary only when this transaction is forced upon?
6:42 am
March 30, 2017
Alexandre said
savemoresaveoften said
Rebate means one spend something, then get something back.
The carbon tax rebate is set up to reward those who dont generate much carbon for whatever reason, but its certainly NOT a rebate.also
Every purchase has some sort of carbon tax embedded in the final price that consumers pay, be it groceries or eat out, even tho some spend categories may not be obvious.
I am confused now: have I been rebated for spending on groceries, gasoline and natural gas heating with carbon tax embedded, or its certainly NOT a rebate?
ok ok, call it a rebate but in much smaller font size than it appears to be 🙂
6:51 am
April 27, 2017
Alexandre said
Apologies, but it is not clear for me how the government triggers inflation by taking $100 from Bob and giving that same $100 to John?
Suppose, I took $20 out of my pocket and gave it to mordko voluntarily. Have I just contributed to inflation?
Or is it inflationary only when this transaction is forced upon?
By taking $100 from Bob-the-farmer, the government impacts profitability and hence production. Bob stops producing food in Canada, food then has to be imported and none of it is cost neutral. Also, carbon emissions go up due to increased inefficiencies and extra transportation. Both Bob and John end up paying more from this innocent exchange of cash.
7:34 am
November 8, 2018
mordko said
By taking $100 from Bob-the-farmer, the government impacts profitability and hence production. Bob stops producing food in Canada...
An anecdotal evidence from the grocery store of the large grocery chain where I shop year after year says something different. I have not seen that much local (Ontario) produce through the whole winter. Usually it were substituted with Mexico/EU produce by the mid-February. Not this year.
Bob-the-farmer must be busy running Ontario hothouses this year. I think he'll manage.
7:39 am
April 27, 2017
Alexandre said
An anecdotal evidence from the grocery store of the large grocery chain where I shop year after year says something different. I have not seen that much local (Ontario) produce through the whole winter. Usually it were substituted with Mexico/EU produce by the mid-February. Not this year.
Bob-the-farmer must be busy running Ontario hothouses this year. I think he'll manage.
I am a farmer, albeit not Bob. While its complicated and lots of factors are at play, carbon taxes are having a negative impact on food production in Canada. At least thats what my equally anecdotal experience is telling me. To be fair, other government programs are even more harmful. The impact is quite different between different types of produce. For vegetables, the prices can and do go up as a result of extra costs imposed on farmers. For grains, prices are set elsewhere, so the impact is different.
The impact is not limited to moving money between pockets.
10:40 pm
April 6, 2013
mordko said
Carbon tax is not “revenue neutral” for farms. I know it for a fact. The impact on consumers is complex and would require an economic study to evaluate. Farmers don’t have an alternative to carbon fuel. In some cases they can pass the costs on to consumers. In other cases the price is set (eg in Chicago) and the only option a farmer has is to cut production, switch to “eco-tourism”, etc. In this case Canadian produce gets replaced by imports.
In other words, government taking money from Bob and then giving the same amount to John has other pricing impacts, which are complex and not in any way or shape neutral to consumers. One thing is clear: they are inflationary.
Those are non-issues.
Carbon taxes have to impact consumer shelf prices to be effective. Therefore, carbon are inherently inflationary because consumer price indices are calculated on those prices with no adjustment for any carbon tax rebates consumers may receive later.
Bank of Canada has already the studied the issue. In one of his speeches, Govenor Macklem blunted a question about their impact on inflation. People were surprised he didn't dodge the politically-charged question. He replied that the bank estimated the impact then on CPI was about +0.4%. Not significant, especially when that is before any rebates.
Revenue neutrality on consumers and business would be nice but not worth the effort of having consumers and businesses file detailed rebate returns and keep receipts for possible auditing.
Really, carbon taxes will actually not work on people like me if the taxes were revenue neutral. Why would I change my behaviour then? Enjoy the time saved by driving my own car or taking my own Uber instead of public transit. Fly and arrive in hours instead of driving days by road in an EV. I have no problem fronting the carbon tax knowing that I would be receiving a big rebate later after filing some detailed carbon tax return.
1:47 am
September 29, 2017
3:54 am
April 27, 2017
Norman1 said
mordko said
Carbon tax is not “revenue neutral” for farms. I know it for a fact. The impact on consumers is complex and would require an economic study to evaluate. Farmers don’t have an alternative to carbon fuel. In some cases they can pass the costs on to consumers. In other cases the price is set (eg in Chicago) and the only option a farmer has is to cut production, switch to “eco-tourism”, etc. In this case Canadian produce gets replaced by imports.
In other words, government taking money from Bob and then giving the same amount to John has other pricing impacts, which are complex and not in any way or shape neutral to consumers. One thing is clear: they are inflationary.
Those are non-issues.
Carbon taxes have to impact consumer shelf prices to be effective. Therefore, carbon are inherently inflationary because consumer price indices are calculated on those prices with no adjustment for any carbon tax rebates consumers may receive later.
Bank of Canada has already the studied the issue. In one of his speeches, Govenor Macklem blunted a question about their impact on inflation. People were surprised he didn't dodge the politically-charged question. He replied that the bank estimated the impact then on CPI was about +0.4%. Not significant, especially when that is before any rebates.
Revenue neutrality on consumers and business would be nice but not worth the effort of having consumers and businesses file detailed rebate returns and keep receipts for possible auditing.
Really, carbon taxes will actually not work on people like me if the taxes were revenue neutral. Why would I change my behaviour then? Enjoy the time saved by driving my own car or taking my own Uber instead of public transit. Fly and arrive in hours instead of driving days by road in an EV. I have no problem fronting the carbon tax knowing that I would be receiving a big rebate later after filing some detailed carbon tax return.
0.4% in price rises seems signifiant, pushing inflation from under 3% to over and impacting monetary policy by the bank. How is that a “non-issue”? Of course the actual number is highly uncertain; its an estimate and the effect is very hard to estimate. “Rebates” will increase inflation further.
I would question if these taxes will impact consumer behaviour. They will certainly impact farmers and several other industries but to really impact the majority of consumers the rises might be too small. We’ll see. For a farmer forced to switch out of food production to the heavily subsidized (and environmentally bad) ethanol corn production, its also an issue because input costs are important to balancing the books.
4:43 am
March 30, 2017
smayer97 said
The Carbon Tax system is a shell game ruse and a waste of time and accomplishes nothing positive and meaningful. It is just virtue-signalling. It should just be abolished.
While we disagree on the CB and interest rate debate, I agree 100% with you while carbon tax impact to consumer is negative and real, it’s end benefit is ‘virtual’ at best.
@Norman1, an impact to CPI in the magnitude of 0.4% is massive, humongous, gigantic, not insignificant. Imagine CB expects CPI to grow at 2.4 and it prints 2.8%, that’s enough to prompt more rate hike !
Correct me if I am wrong, but I am quite sure Tiff was talking about absolute CPI change, not relative (as in % on a %). If they do the latter, they are not qualified to talk anything finance ! Always upset me when someone talks about bond yield change in relative terms and not absolute. Bond yield and rates change are in bps, not % on a % ! Talk like the pro, people !
8:00 am
November 8, 2018
smayer97 said
The Carbon Tax system is a shell game ruse and a waste of time and accomplishes nothing positive and meaningful. It is just virtue-signalling. It should just be abolished.
This seniors couple I mentioned, they are getting Carbon Tax rebate equal to 1 month of their grocery spending, which is 1/12 or 8.33% of their annual spend.
When Carbon Tax system is abolished, grocery prices will instantly drop by 8% - is this what you are saying?
9:24 am
April 6, 2013
savemoresaveoften said
While we disagree on the CB and interest rate debate, I agree 100% with you while carbon tax impact to consumer is negative and real, it’s end benefit is ‘virtual’ at best.
@Norman1, an impact to CPI in the magnitude of 0.4% is massive, humongous, gigantic, not insignificant. Imagine CB expects CPI to grow at 2.4 and it prints 2.8%, that’s enough to prompt more rate hike !
Correct me if I am wrong, but I am quite sure Tiff was talking about absolute CPI change, not relative (as in % on a %). …
Of course it was absolute on CPI itself and not on the CPI inflation rate. +0.4% on a 6% CPI inflation rate would only be a 6.024% CPI inflation rate.
No, +0.4% on CPI is not massive. The difference between 6% and 6.4%, for example, in CPI inflation is not significant. A $25 dinner would become $26.60 instead of $26.50. Not significant.
No, the central banks don't mechanically react to CPI changes. They look into the causes of the changes and decide whether or not a monetary policy response is called for.
An example given is that the CPI increase from a new 100% tariff on imported furniture would not justify a policy rate increase. Same with the CPI increases from mortgage rate increases that have been driven by the central bank's policy rate increases.
Carbon taxes do work. That's how we got rid of leaded gasoline. Once the price advantage of leaded gasoline was taxed away, people stopped buying unleaded gas because it cost the same and it was better for the environment.
Some consumers do benefit financially from the carbon tax rebate. Those who don't have their own car or don't drive much will come out ahead after the fixed carbon tax rebate.
10:25 am
November 18, 2017
Bill: You are right on both counts. It's usually me who is correcting others on spelling "Poilievre," but I blew it that time.
And I was unclear in trying to point out that we get GST+Carbon Tax rebates, but the GST rebate doesn't affect the Carbon Tax calculation. (Because we get the same single cheque from the governments in most provinces, I felt the need to mention that.)
BlueSky:
Let's face it, a government is not in the business of losing money.
Actually, most governments are. 😀
Canada is not isolated by a wrapped bubble from the rest of world.
That's why unilateral climate control and emissions plans can't work, and why we have so many treaties and conferences about working together. Otherwise, there would indeed be a competitive advantage in not acting.
savemoresaveoften:
It's basically rewarding those who are wealthy enough to buy a EV, to save via $5000 govt rebate, save on electricity cost vs gasoline AND on top earn a carbon rebate. Since they are not really spending much that "pays a carbon tax", why are they receiving the same rebate ?! Just cant argee with it at all.
This is how it encourages carbon reduction. Everyone gets the same rebate, more or less, but how much you spend making emissions and how mush you use elsewhere us under your control. (Speaking as a motorcyclist...)
cgouimet:
I'm all for the carbon tax but the Liberals screwed it and themselves royally when they did the fuel oil side-step for a few Newfoundland votes.
I actually screamed out loud when I heard that announcement! It was a great present for the opposition. They really should have presented an increased rebate after focusing on how unfairly the heating oil prices were clobbering it users. Sort of "they're suffering a lot more, so we'll give them back a little more," instead of actually removing the tax, which is so emotionally sensitive.
Alexandre:
Apologies, but it is not clear for me how the government triggers inflation by taking $100 from Bob and giving that same $100 to John?
It's only the consumer-facing Carbon Tax that is rebated. All the tax on inputs that affect prices are NOT rebated.
RetirEd
7:37 pm
April 6, 2013
RetirEd said
It's only the consumer-facing Carbon Tax that is rebated. All the tax on inputs that affect prices are NOT rebated.
All the federal carbon tax collected is returned. It's not really a rebate to anyone because of how the rebate is calculated.
Some (government says around 80% of individuals) get more back than the carbon taxes they paid. Unfortunately, others will get less than what they paid in carbon taxes back.
8:10 pm
April 27, 2017
Norman1 said
savemoresaveoften said
While we disagree on the CB and interest rate debate, I agree 100% with you while carbon tax impact to consumer is negative and real, it’s end benefit is ‘virtual’ at best.
@Norman1, an impact to CPI in the magnitude of 0.4% is massive, humongous, gigantic, not insignificant. Imagine CB expects CPI to grow at 2.4 and it prints 2.8%, that’s enough to prompt more rate hike !
Correct me if I am wrong, but I am quite sure Tiff was talking about absolute CPI change, not relative (as in % on a %). ….
Carbon taxes do work. That's how we got rid of leaded gasoline. Once the price advantage of leaded gasoline was taxed away, people stopped buying unleaded gas because it cost the same and it was better for the environment.
Works differently, depending on how easy it is to replace a product and change behaviour.
Perhaps people will keep houses a little cooler in winter and warmer in summer. Maybe hockey will become too expensive and more families will shift to other sports.
However we will still use oil/plastics and we will still eat, regardless of carbon tax. In industries, such as farming, this tax will shift production of food (and CO2) abroad. And a higher percentage of revenue from fossil fuels will help to fund nasty regimes.
5:39 am
November 8, 2018
mordko said
However we will still use oil/plastics and we will still eat, regardless of carbon tax. In industries, such as farming, this tax will shift production of food (and CO2) abroad. And a higher percentage of revenue from fossil fuels will help to fund nasty regimes.
For fossil fuels revenue, it is other way around. By giving people incentive to move from fossil fuel cars to EVs in US and Canada overall demand for fossil fuels could decline to the point when oil imports from nasty regimes will not be necessary.
That, in turn, will reduce funding of nasty regimes and their political influence on US.
You do not need to eliminate fossil fuels consumption for that, just reduce it by the current level of imports from "nasty regimes."
5:53 am
March 30, 2017
Alexandre said
For fossil fuels revenue, it is other way around. By giving people incentive to move from fossil fuel cars to EVs in US and Canada overall demand for fossil fuels could decline to the point when oil imports from nasty regimes will not be necessary.
That, in turn, will reduce funding of nasty regimes and their political influence on US.You do not need to eliminate fossil fuels consumption for that, just reduce it by the current level of imports from "nasty regimes."
Canada and US is an importer of fossil fuels ? I dont think so.
US is the biggest producer of crude oil (in fact since 2018 from shale production) and a net exporter. Canada's production of oil and natural gas is also more than Canadians can consume, and has been an exporter as well.
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