In the May 3 issue of the Cochrane Eagle Mr. Bob Lee responded to my letter published on April 26. I feel that it is necessary to respond to his letter in order to show how distorted the debate about the NDP government and the carbon tax in particular has become. There are so many things to comment on in Mr. Lee's letter that it is hard to know where to begin. However, I will submit only some of my concerns, most of which will serve to address what is absent from Mr. Lee's letter. First, every civilized society on the face of the Earth, since time immemorial, has had some form of income redistribution. Without it anarchy, crime, and violence would prevail. Mr. Lee suggests that he has been a victim of some income distribution scheme. While it is true that some people benefit and others pay a tax for carbon emissions this program is not fundamentally different from all the other income distribution programs in effect at the governmental level. That includes the cost of educating children, Old Age Security (OAS), health care, Guaranteed Income Supplement (GIS), GST rebates, the previous government's arts credit, public transit credit, fitness credit, public parks, roads, subsidy to oil companies, etc. If Mr. Lee had to pay the true cost of living in this society then he would be screaming for government programs to help him live a decent and productive life.
Would Mr. Lee be willing to pay for the cost of a heart operation out of his own pocket, say $500,000, so that others do not subsidize his use of medical resources? How about the cost of educating his kids at approximately $8,000 per student per year? I think not. As for me, I do not consider my $154 as an income distribution windfall but instead as a reward for living a less carbon intensive lifestyle. How I spend my money is of course my business but let it suffice to say that for the last several years I have been in the process of giving away any surplus money I have to charities of all kinds. And I have contributed to renewable energy projects as well.
Second, our society, and the economics profession in general, has ingrained in the tax code the concept of paying for the cost of pollution. In the case of the carbon tax, those who choose to pollute are punished and those who don't pollute are rewarded. Those oil companies that innovate and pollute less pay a smaller amount of the carbon tax. It is a system of reward and punishment, which is the fundamental basis of our legal and justice system. If we assume that everybody inadvertently engages in a necessary but undesirable behavior (carbon emissions) and it effects the whole population then a program has to be designed that takes into account the ability to pay for what economists would call a miss allocation of resources. The result is a carbon tax which compensates those who can least afford it and taxes those who can afford it. Alberta has designed its carbon tax program in such a way that families that earn up to $95,000 (with a phase out factor above $95,000) will receive a rebate that is more than adequate to offset any additional cost that they have incurred as a result of paying the tax. If they want additional money in their pocket, they can learn to save energy and spend their windfall elsewhere. In essence, nobody has to pay the full tax, including those who do not receive a rebate. All they have to do is change their behaviour.
Third, I do not know Mr. Lee or anything about his economic circumstances. I assume that he is not receiving a rebate so his income must be above the threshold limit in order to qualify for a rebate. If that is the case then his portion of the tax is in fact being used to reduce emissions by being redirected into energy efficiency improvements across the board. There is also nothing stopping Mr. Lee from undertaking energy improvements of his own. I note here that Mr. Lee states that he has two homes to heat and power and also has two cars. Assuming a normal family – with one home and one moderately fuel-efficient car (like mine) used to commute to work in Calgary (500 kms per week X 50 weeks with a car that gets 15 kms per litre) – I estimate the cost of the Carbon Tax at $330 per year in total. If Mr. Lee's income is above the threshold for a rebate then I would suggest that the old chestnut that our Conservative brothers like to use applies. Mr. Lee " does not have a revenue problem, he has a spending problem."
Fourth, if Mr. Lee would like advice on how to live a low carbon and sustainable lifestyle I am willing to offer my services as an economist to him for free. I am in the phone book. If he would like to debate this issue with me at a public forum in the fall I will be willing to show up and explore the issue with him as long as he brings his latest tax forms so I will know whether or not his concerns have legitimacy.
Finally, Mr. Lee's letter did more to illustrate my thesis that there is far too much whining going on and not enough rational and intelligent thought than I ever could. Arguing about .066 cents per litre is patently absurd. In the last couple of weeks alone the price of gasoline has gone up significantly. And it is 30 cents per litre more expensive than a year ago. Only .02 cents of that is the carbon tax. I rest my case.
James Perras
