LASER TALK: Balancing the Budget, Social Concerns and the Environment
Governments have the difficult yet doable task of balancing the budget, social concerns and the climate crisis.
The Liberal Government is not on track to balancing our budget (1, 2). As well, despite signing the Paris Accord and having a national carbon pricing policy, Canada’s climate targets are still woefully inadequate (3) of the previous government and it is unlikely that we will meet our targets. (4)
Ideally, we need a carbon price of at least $150.00 tonne by 2030 (5). However, forty-eight percent of Canadians are within $200 each month of not being able to make their bills (6). Clearly, carbon pricing needs to be revenue-neutral and therefore, the government must use other sources of revenue to balance the budget and other social concerns.
The Liberal Government promised two policies in their 2015 Election campaign that would inject over two billion dollars a year into government coffers that they have yet to deliver on. They promised to phase out fossil fuel subsidies which are about 1.6 billion dollars federally (7). They also promised to close the stock option loophole. The stock option loophole gives tax-free status to half of all income earned when a CEO or corporate board member cashes in stocks options. It would inject $750 million into government coffers (8,9). As well, the Canadian government should go after money in tax havens. Tightening tax haven laws would unleash billions of dollars into government coffers (10, 11, 12) – the Canada Revenue Agency recently estimates that Canada loses $14.6 billion dollars in revenue do to tax havens (14) . Additionally, the government could tax inheritance. Canada is the only G7 country without inheritance tax (15) (16). CIBC projects that Baby boomers under 75 set to inherit $750B in next decade. (17)
Finally, the government should enact a national and revenue-neutral price on carbon pollution, such as carbon fee and dividend, rising to $150.00 per tonne by 2030. The strong and clear market price on carbon rising incrementally in combination with border tax adjustments would spark investment in Canada’s cleantech sector. The dividends returned to households would stimulate local economies. By taxing carbon pollution, carbon fee and dividend would also decrease greenhouse gas emissions.
In conclusion, what is needed is tax reform in Canada. The government needs to stop giving handouts to fossil fuel companies, close the CEO stock option loophole, tighten tax havens laws, tax inheritance, and start taxing in earnest the things that we don’t like such as pollution with carbon fee and dividend and not tax the things we like our income by returning the dividends back to us.
(Updated Saturday, September 15, 2018)
- https://www.budget.gc.ca/2018/docs/plan/budget-2018-en.pdf February 2018 budget
- http://www.rbc.com/economics/economic-reports/pdf/canadian-fiscal/fedbud18.pdf March 2018 data
- http://www.oag-bvg.gc.ca/internet/English/parl_otp_201803_e_42883.html March 2018 data
- http://climateactiontracker.org/countries/canada.html April 2018 data
- “Throwing Money at the Problem: 10 Years of Executive Compensation”. January 2017 report by the Canadian Centre for Policy Alternatives
- “CANADA: The New Tax Haven.” (2015) Alain Denault