Friday, June 20, 2008

Green Policy Debated in Canadian Parliament

As Canada's parliament is winding down for the summer break, a very lively debate is taking place in Ottawa. Representatives from Canada's four major parties are holding a historic debate on Green policy issues. Yesterday, the Liberals unveiled an ambitious plan of energy taxation and income tax reduction. The 15 billion dollar Liberal plan, called "The Green Shift Plan" will tax industry and consumers. According to Liberal leader Stephan Dion the plan is "powerful and simple, we will cut taxes and shift those taxes to polluters." Dion believes that the tax will encourage less energy use and stimulate innovation. The ruling Conservatives have proposed a polluter pay program. The NDP and the Liberals charge the Conservatives with accommodating Canada's oil industry.

Dion wants to tax energy (except gasoline), cut income taxes, and provide family support payments. Given that consumers and industry each account for half of greenhouse gases, the tax will be levied against industry and consumers. The average home would pay $250 more per year. The Green Shift plan will regulate 75% of the carbon emissions produced in Canada. The Liberals claim thier program is revenue neutral. Others disagree saying that Dion's plan is a tax grab.

Liberal's claim to be bringing together the common interests of Green and tax reduction. With the statement "Giving more of what we need and taking from that which we do not." Dion wants to position Canada as an example to nations like China and India. Despite the fact that several environmental groups have come out in support of the Green Shift plan, the Conservatives have prepared an advertising campaign to the proposed plan.

Putting a price on carbon is an essential step and carbon taxes are the fastest way to do that. In an interview with the CBC's Don Newman, Dion explained why he opted for the Green Shift plan over a cap-and-trade plan. Dion pointed out that cap-and-trade is complicated and it will take years to work out the details. Dion also explained that cap-and-trade, like the carbon tax will ultimately fall upon consumers. Indeed critics argue that any form of carbon tax will increase costs all along the value chain, a cost which will ultimately fall on consumers. And this is why the Liberal plan compensates families. While providing an economic incentive to reduce their energy consumption.

The Conservatives claim their plan will cut carbon emissions by 20%. But the year that is used as a starting point for reductions is another important difference between the Liberals and the Conservatives. The liberal are using 1990 levels of carbon and the conservatives are using much higher 2006 levels.

On the issue of Green, the left and the right appear to be stealing from each others playbook. The NDP's leader Jack Layton supports a cap and tax system but the Conservatives disagree, claiming they do not want to let the big polluters get away with paying their way out.

In Canada, carbon tax proposals are putting the spotlight on the environment. Like Europe and California, Canadians must put a price on carbon or risk being excluded from these trading relationships. As the Canadian parliament draws to a close, it is becoming evident that politicians are seeing the merit of a Green platform. The announcement of the Green Shift plan may be the starting gun for the next Canadian election campaign. Dion is betting his party's future on Green, setting the stage for a Canadian federal election where Green is the salient issue.

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