The final quarter of 2015 offered up a landmark moment in Alberta’s history, as environmentalists, oil executives, academics, and NDP politicians agreed on something at long last. Perhaps even more surprising than the cooperation of these opposing stakeholders was what they agreed upon; their solidarity came as a result of the announcement of a new carbon tax proposed for the province.
Carbon tax is typically defined as a tax based on greenhouse gas emissions. A price is put on each tonne of greenhouse gas that is emitted. In theory, this price signal will elicit a market response through the economy that will incentivise the idea of emission reduction.
Alberta’ new carbon policy has been called a “tax on everything that moves” by some critics. According to a prominent Calgary accountant, this tax will raise the price of gas and home heating significantly, imposing an extra expense of $300 to $600 per year on Alberta families. This Calgary accountant further predicts this will rise to over $900 per year by the end of 2030.
However, this price hike on heating and gas is not the problem; Albertans are more concerned about the ancillary costs. The price of food, clothing, and all goods requiring transportation will invariably rise. Wen goal-fired electricity plants close, and green-energy companies are subsidized, electricity costs will climb. Some critics and stakeholders suggest that this will cause the province to lose investment, and rural communities may be impacted.
Predictions in Alberta’s climate report suggest that the carbon tax will be crucial in preventing the growth of our emissions, but is this the case? A carbon-taxed Alberta will still see a 1.1% rise in emissions measured from 2013 to 2030. Some suggest that a best-case scenario would see Alberta scrub 50-megatonnes of emissions out of our air. This sounds great, but the sad reality is that in this same timeframe, China will have increased its world emissions by 58 times. Why would Albertans fork over thousands to fight a losing battle against emissions when larger global superpowers aren’t participating?
Clearly, the answer is not for everyone to dismiss carbon reduction strategies simply because some aren’t on board, but no real answers to this problem have surfaced. In the meantime, critics are busy challenging the supposed “revenue neutral” position of this new tax.
In order for a tax to be considered “revenue neutral” by a Calgary accountant, the government must still receive the same amount of amount despite the changes in tax law. In other words, the tax has a “neutral” effect on the federal revenue.
When this tax was first introduced in 2008, corporate and personal income tax was reduced to ensure revenue neutrality. However, reports suggest that 100% of the proceeds from carbon pricing will be reinvested in Alberta. This is not a revenue-neutral approach.
The carbon tax is getting a considerable amount of backlash from critics and opposing political interests, even as environmentalists and oil companies celebrate its imposition. Some are calling this a cash-grab rather than an environmental initiative, citing the plans to reinvest proceeds into Alberta’s infrastructure, and the non-compliance of global superpowers as two main reasons.
Ultimately, how you feel about this new carbon tax is up to you, and highly dependent on your stake in the matter. To learn more about how these carbon taxes will affect you, contact your Calgary accountant today at (403)-800-3303, or book an appointment with a Calgary accountant online at http://edisonwencpa.ca/contact-us/.