Thursday, May 15, 2008

Carbon tax on Gasoline is Redundant Part 2

The main argument for carbon tax is that it will have change people’s behavior. The thing is though that the raising cost of gasoline is already doing that. A carbon tax is redundant. Fuel prices are only going to go up and up and that provides people with all the incentive they need to change their behavior. Adding a carbon tax makes such shock therapy all the more painful.

The Liberals have countered that they not increase the amount of taxes Canada’s pay on gasoline. They will simply replace the excise tax with a carbon tax. That being the case, why bother talking about applying a carbon tax to gasoline. Apply a carbon tax to everything but gasoline.

1 comment:

Dan said...

A revenue-neutral carbon tax would result in some of the high gasoline prices being available for dividends to all Canadians instead of high profits for oil companies, since market forces would preclude gasoline prices rising by the full amount of the carbon tax.

Absent a carbon taxes, high energy prices encourage tar sands development and other technologies that increase greenhouse gas emissions. For more details see the Carbon Tax Center web site.