Thursday, June 19, 2008
Liberal 'Green Shift'
Ok, now that Dion has outlined his so-called ‘Green Shift’ I can admit there is something very fundamental that I just don’t understand. First of all I don’t really believe that it could be revenue neutral because the rich always seem to fair better in any tax change, and tax credits for rural and low-income Canadians won’t really make the difference. But let’s just say, for the moment, that it could. Here is the problem I just don’t get; if the objective is to reduce carbon usage by taxing carbon usage what happens if it works and people and corporations reduce en masse the amount of carbon they consume. Won’t this mean a sudden and radical reduction in Government revenue? And if this is true, won’t the government have to go right back and increase the very tax breaks they bring in with the ‘Green Shift’? I think there are other problems with such a plan and I think negative incentives are never as effective as positive ones. Take, for example, the recent rise in gas prices; are they really causing significant reductions in overall gas usage? And even if they are, they reduce recreational usage such as vacation trips which in turn hurts other parts of the economy. I believe the only real way forward is a massive ‘positive’ shift in incentives including radical and direct government investment in new technologies and huge tax breaks and credits on purchasing green appliances, cars, furnaces etc. But even if the Liberal ‘Green Shift,’ which relies on negative incentives were to works over a long period of time, there will have to be a constant shift in the bureaucracy to compensate for the reduction in revenue that obtains from the reduction in usage. It just seems a little bit backward to me. And, by the way, this is the main reason I have no faith in the Green Party of Canada; almost of its proposals involve radically negative incentives, and despite prevailing wisdom, I don’t think they are nearly as effective as positive ones.