OPINION | Ottawa needs to fight more effectively for the carbon tax

This column is an opinion from Max Fawcett, a freelance writer and the former editor of Alberta Oil magazine.

Death and taxes may be the only certainties in life, but over the last few years conservatives in Canada have done their best to add misrepresenting the federal carbon tax to that list.

Their latest attempt to confuse Canadians came in the form of Conservative reaction to a Jan. 5 story in Blacklock's Reporter, an Ottawa-based subscription news service, which suggested that "Canadians paid millions more in #CarbonTax than they received in rebates."

The source for that claim was the first annual report produced on the Greenhouse Gas Pollution Pricing Act by Environment and Climate Change Canada, one that (among other things) described the total revenues raised by the tax and the ways in which it was paid back to Canadians.

The report contained a chart depicting the balance of proceeds and payments. Blacklock's added a helpful red box around the rebates to households to emphasize that those figures were less than the total amount Canadians paid. 

That image was immediately blasted out by Conservative pundits and members of parliament on Twitter, who seized on the story as another example of the federal government's apparent dishonesty around the tax.

"This week, the Trudeau government released its annual report on the carbon tax, which clearly shows the federal government collected far more in carbon taxes last year than it actually rebated to households in those provinces," Canadian Taxpayers Federation federal director Aaron Wudrick wrote in the Toronto Sun.

"It's not a small sum: of the $2.6 billion taken from Canadians' pockets, just under $2 billion was rebated," Wudrick added.

Chicanery at work

Some Conservative MPs went even further than that.

Jeremy Patzer, the 34-year-old member for Cypress-Grasslands in Saskatchewan, tweeted his take at Jonathan Wilkinson, the federal minister of environment.

"It's right there in print," he wrote. "You can't lie your way out of this one. Where did the rest of the money go?"

Funny he should ask, because the answer to that question was contained in the very same chart that Conservatives were treating like a smoking gun — the part that had been selectively cropped out.

The chart showed hundreds of millions of dollars in payments to small and medium-sized enterprises as well municipalities, universities and colleges, schools and hospitals. The selective cropping also excluded a line indicating that any difference between proceeds and payments would be added to the next year's Climate Action Incentive payments.  

That wasn't the only bit of chicanery at work here, either.

Equally dishonest was the implication that the federal government had promised that the rebates would be larger than the total tax paid by all Canadians. That was never the case: instead, we were told that the vast majority of households would get more back in rebates than they paid in carbon taxes. 

On this matter, the Parliamentary Budget Office has been very clear: the vast majority of Canadian households will receive more in rebates than they pay in carbon taxes, and that includes indirect impacts on things like food costs.

The PBO has been equally clear about the fact that the households who will benefit the most from the carbon tax and rebate are the ones in the lowest income quartile.

Conservatives will continue to pretend that the burden of the carbon tax falls most heavily on working class Canadians, but the facts simply don't bear this out. 

But no matter: for an already confused public, the cropped chart and accompanying conservative outrage will almost certainly overwhelm any attempts to rationally explain the policy.

And while said Conservatives are certainly to blame for this — Philip Lawrence, the CPC shadow minister for national revenue, even sent out a press release trading in the latest deceit — the federal government deserves its share of the blame as well. 

That's because while the policies that underpin its climate plan are well designed, they've done a far worse job of communicating with Canadians about them.

In fairness, even climate policy wonks can struggle at times to explain the nature of the federal backstop, especially how it applies to large industrial emitters. But when it comes to helping Canadians understand what they pay and whether they're coming out ahead financially, the federal government has done a predictably lousy job. 

Confusion reigns

According to a September 2020 Leger poll that was conducted for Clean Prosperity, fewer than one-in-three Canadians living in the 905 region knew that carbon tax revenues were rebated to households. That's partially a function of the way it's distributed, which is in the form of a tax credit called the "Climate Action Incentive rebate."

That name might have pleased the public servant who came up with it, but it invites confusion in a public that is accustomed to hearing it described in very different language.

And because millions of Canadians don't actually do their own taxes, its very existence may have escaped their notice — especially if their tax preparer wasn't particularly anxious to tell them about it. 

The federal government has signaled its intention to move to quarterly deposits rather than annual tax credits by 2022, but this could be too little, too late. Even then, they'd be repeating a lesser mistake that Alberta's NDP made in their own rebate program, where the funds were deposited automatically in people's bank accounts — and therefore often overlooked.

If the federal government wants to fix this error, they'll need to take a page out of their opponent's playbook.

In Ontario, Doug Ford forced gas stations to put stickers purporting to show the cost of the carbon tax on their pumps. And while the stickers were poorly made and politically crass (and eventually ruled unconstitutional), they still effectively communicated his government's side of the story in simple and straight-forward terms. 

That's why, rather than allowing people to claim a tax credit or depositing money into their bank accounts, the federal government should send Canadians actual, physical cheques — and make it clear who's sending it to them.

Would they be accused by the opposition of bribing people with their own money? Probably. But that's a cost they should be willing to pay, especially when the price of failure here is so high.

In an environment where misinformation thrives, and where one side has repeatedly shown its willingness to spread it about the carbon tax, the Trudeau Liberals may have to fight fire with something other than wood.

This isn't just a political consideration, either.

As Canada tries to repair its balance sheet and grow the economy in the wake of COVID-19, it will need all the investment it can get. And according to Michael Berends, a managing director with ClearBlue Markets, a firm that helps companies understand and manage their carbon costs, the continued uncertainty around carbon pricing's future in Canada is getting in the way of that investment.

"If you look at the cap and trade program that Ontario had in place in 2017, which was removed by the conservative government, it had over $2 billion in proceeds from auction — money that was going to be rolled out to clean initiatives, including a significant portion to large emitters," Berends told me.

Certainty more important than price

For those large emitters, he adds, policy certainty might be more important than price.

"I'm not here to say that all emitters are happy with the $170 per tonne price, but they first want to know if it's really going to be there or not."

And that lack of certainty — in Ontario, for example, large emitters have had to learn about and understand three different programs in five years — could drive capital into more stable markets.

"For emitters that have plants in other locations outside of Ontario or the rest of Canada, if there's more certainty in those places, then the money might be moving there instead — because you know what you're facing," says Berends. 

That's something that all Canadian politicians should be eager to avoid. But that may require one of two things to happen: either Conservatives stop misrepresenting the nature and impact of carbon pricing, or Liberals start fighting for it more effectively.

For both sides of the political spectrum, that is almost certainly an unpleasant idea. But losing out on billions of dollars in potential investment in low-carbon projects should be even less attractive.

"The acceptance of carbon pricing is here now in Canada, at least on the emitter side," Berends says. "Now it's up to the politicians to deliver that certainty and give a clear path forward."

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