LASER TALK: Balancing the Budget, Social Concerns and the Environment
Governments have the difficult yet doable task of balancing the budget, the climate crisis and social concerns.
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).
Ideally, we need a carbon price of at least $150.00 tonne by 2030 (4). However, forty-eight percent of Canadians are within $200 each month of not being able to make their bills (5).
How can we price carbon, not go further into debt as a country, protect low and middle-income Canadians, and at the same time cut GHG emissions?
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 four billion dollars into government coffers that they have yet to deliver on. They promised to phase out fossil fuel subsidies which are about 3.3 billion dollars (6). 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 (7,8). As well, the Canadian government should go after money in tax havens. Tightening tax haven laws would unleash billions of dollars into government coffers (9, 10).
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 clean tech sector. The dividends returned to households would stimulate local economies. By taxing carbon pollution, carbon fee and dividend would also decrease GHG emissions (11).
In conclusion, what is needed is tax reform in Canada. Stop giving handouts to fossil fuel companies, close the stock option loophole, go after money in tax havens and start taxing in earnest the things that we don’t like such as pollution and not tax the things we like such as income.
- http://climateactiontracker.org/countries/canada.html (November 2016 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