Pallister smart to change course as carbon-tax circumstances change
This column first ran in the Winnipeg Sun.
Everyone is shocked that Premier Brian Pallister now opposes a carbon tax. We shouldn’t be. The carbon tax was built on a flawed foundation, but circumstances have undermined it to the point of collapse.
Two years ago, Prime Minister Justin Trudeau committed to collaboration.
“We will end the cycle of federal parties – of all stripes – setting arbitrary targets without a real federal/provincial/territorial plan,” stated the Liberal campaign platform. “We will instead partner with provincial and territorial leaders to develop real climate change solutions.”
But Ottawa showed no respect for Manitoba’s plan or the billions it’s invested in clean hydro. Instead of partnership, the prime minister imposed arbitrary targets without any kind of national plan. Ottawa then threatened to punish Manitoba with a rising carbon tax.
“We had a choice: either you’re going to stand up for Manitobans in a year when the feds come in … with a higher carbon tax or you do it now,” said Pallister. “We’re doing it now.”
Consider Pallister’s options. He could knuckle under and impose a rising carbon tax as per Ottawa’s prescription. Or he could impose a provincial carbon tax only to have Ottawa layer another carbon tax on to top to create a compounding tax burden and an administrative nightmare. Or he could reject the carbon tax and fight the threats. Pallister made the obvious choice.
Trudeau’s broken promise of partnership isn’t the only changed circumstance. Other provinces once seemed poised to impose carbon taxes. At first, only Saskatchewan opposed the carbon tax, but then Ontario moved and that was just the start.
Ontario’s former-Liberal Premier Kathleen Wynne’s cap-and-trade system was unpopular, but Ontario’s former-Progressive Conservative leader Patrick Brown promised to replace it with a carbon tax. Then Brown was dumped due to scandal and every PC leadership candidate opposed a carbon tax. Doug Ford won the leadership and the election with an overwhelming mandate to fight the carbon tax.
The Atlantic provinces are becoming increasingly opposed to a carbon tax. Alberta has pulled out of Ottawa’s growing carbon tax plan and polls suggest a new government may soon scrap it entirely. Even Quebec’s cap-and-trade system has a per-tonne cost below Ottawa’s demands.
If other provinces successfully block Ottawa, a carbon tax in Manitoba would make the province uncompetitive within confederation.
The most unexpected change in circumstance came from the NDP.
“At this time when we want people to transition to green choices, the government is asking them to do so with less money in their pockets,” stated Opposition leader Wab Kinew on Twitter. “It doesn’t make sense.”
The Opposition used procedural tactics to delay Manitoba’s carbon tax and Pallister clearly recognized the impossibility of building a carbon-tax consensus.
One last thing became undeniable: Manitoba’s experiment again proved it’s impossible to impose a carbon tax without raising taxes. It wasn’t for lack effort and the province tried to offset the carbon tax with a suite of tax cuts, but the result was still a tax hike of nearly a hundred-million dollars a year. Others have reached the same conclusion. British Columbia implemented stringent legislation to keep its carbon tax revenue neutral, but it cost taxpayers millions. Even Hillary Clinton admitted in her post-election book that she tried to develop a carbon tax policy, but couldn’t do it without raising taxes.
Manitobans already pay higher taxes than their neighbours and when the provincial experiment once again proved carbon taxes increase taxes, Pallister simply couldn’t support it.
The carbon tax policy was flawed from the beginning and it unraveled from there. Trudeau reneged on his commitment to collaboration. Other provinces rejected the tax. And the theory proved impossible as it moved toward implementation. As a result, Pallister made the inescapable choice: he rejected the carbon tax.