I will admit to being generally left of center politically but a recent position taken by the BC NDP has me reconsidering my options, especially with a provincial election coming up in a few months.
The background starts earlier this year when the BC Liberal government (note - the BC Liberals are more "conservative" than their name would lead you to believe) brought in a carbon tax - the first in Canada. It was small, but generated a good deal of discussion (whining might be a better word).
The provincial NDP, taking the tired but true position of attacking anything the government does, no matter what it is, has come out swinging, denouncing the carbon tax as useless, an attack on ordinary taxpayers and leaving big polluters off the hook. If I wasn't so cynical about politics, I'd be puzzled by this stance. Seems to me that it's perfectly logical to tax things you want to discourage and reduce taxes on things to want to encourage. I can't see why this principle shouldn't be applied to everyone, including the "ordinary taxpayer", especially as we all contribute to the problem of CO2 emissions.
I don't know much about the relative merits of carbon taxes vs the "cap and trade" system, but I get the impression that a carbon tax is supported by many economists. It certainly looks simple to me, especially given that a "cap and trade" system doesn't seem to be as easy (ie: likely) to set up. My annoyance is with political parties that seem determined to use anything as a political football, even when it's something we obviously need to do and even if the solution isn't perfect.
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The NDP thinks they can get more votes by opposing a carbon tax and painting it as a tax which doesn't do anything. The NDP is alienating both environmentalists and economists with its position and doing less than nothing for climate change or for helping our economy adapt.
While either system can be set up to achieve similar goals, carbon taxes are simpler, more transparent, and cheaper. The US Congressional Budget Office has no axe to grind, except looking for sound fiscal policy, and concluded a carbon tax had significant advantages over cap and trade. Here's a link:
http://cboblog.cbo.gov/?p=65
However, in the US it is believed that politicians cannot use the word "tax" and so they will implement a cap and trade. Some companies prefer this because, if they are large enough, they can often game the market to their advantage. Also, cap and trade is complex and requires lengthy negotiations setting up all the caps, and companies may think they can strike a deal. A carbon tax is usually a set price applied equally to everyone.
Recognizing the US will go this way, the Congressional Budget Office has studied ways to make a cap and trade more like a carbon tax. These changes reduce the costs, although they admit it cannot capture all the benefits of a carbon tax. Still, it is pretty good if properly implemented, and better than doing nothing. It can be tricky though, and the first round of cap and trade in Europe, was a mess and had to be overhauled.
One point I found interesting is that the Congressional Budget Office argues that even if the rest of the world goes with cap and trade, a country can still save more money by implementing a carbon tax and link their tax to the other countries cap and trade. These two systems work fine together. It is not either or.
Yeah, what she (and the CBO) said.
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