Carbon Taxes and Federal-Provincial Relations

Earlier this month Prime Minister Justin Trudeau announced plans to introduce a federal carbon tax to be implemented by 2018. The federal government has been negotiating and pressuring the provinces to take a concerted, meaningful effort at reducing CO2 emissions. A number of provincial governments have taken steps independently before the federal election to curb emissions. British Columbia has been a leader, but Alberta, Ontario and Quebec have also laid out plans for or implemented carbon pricing or cap and trade.

Unsurprisingly there are a number of provinces crying foul over the 'unilateral' decision of the federal government. Saskatchewan's Premier Brad Wall, a key opponent from the outset, has objected to the imposition, but protest has also come from Newfoundland and Labrador's Liberal government and Nova Scotia. 

The plan is that the federal government will impose a $10 per tonne carbon tax in jurisdictions that have neither a cap and trade plan or a carbon tax of their own in 2018. British Columbia has a price of $30 per tonne at the moment. For those concerned about the impact on the economy it might be valuable to point out that British Columbia has the strongest economy in the country at the moment. The money collected in each province will be returned to the province, meaning that there is no transfer of wealth from the provinces to the federal government. The tax, that is to say, is not punitive.

The plan is seen my many climate change advocates as a positive development, if not going far enough in their opinion. However, the plan and the reaction to it may illustrate more of the inherent frustrations of the Canadian system. In Canada the provinces wield significant powers, yet it seems logical for the federal government to take the leadership on an issue such as climate change. In an ideal world the provinces would come up with effective strategies tailored to their unique circumstances, but many seem content to sit on their hands. The federal approach may be just enough carrot and stick to pressure the provinces to act.

I will admit that climate change is an issue that I am not passionate about. I worry about it, but I also concerned about our ability to switch over to a carbon neutral approach. That said, this has been a long time coming, and I hope this approach helps to bend the curve on our emissions and bring on a new era for Canada.