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‘Serious Numbers’ Show Provinces Gain by ‘Recycling’ Carbon Tax Windfalls

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Dissenting premiers like Saskatchewan’s Brad Wall and Nova Scotia’s Stephen McNeil notwithstanding, carbon taxes promise a revenue rush ripe with opportunities for Canada’s provinces, the independent Ecofiscal Commission contends in a report.

“Canadian provinces that introduce carbon taxes will reap enormous economic windfalls that will enable them to lower taxes, improve crumbling infrastructure, and more,” reports the National Observer.

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The economic think tank, which bills itself on its website as pursuinga thriving economy underpinned by clean air, land, and water,” based its calculations on a $30-per-tonne carbon price, “British Columbia, Alberta, Ontario, and Quebec could respectively collect $1.4 billon, $5.8 billion, $3.8 billion, and $1.8 billion” in new revenue each year, based on each province’s 2013 greenhouse gas releases, the Observer writes.

“These are serious numbers,” said Commission Chair Chris Ragan. “They are numbers that make you realize that if you start collecting this amount of revenue, you can do serious things.”

In keeping with accord struck among First Ministers last month in Vancouver, the Ecofiscal Commission anticipates each province will create its own carbon pricing mechanism—and receive the revenues—not the federal government. It suggests that different “provinces will have different objectives, depending on their own context and priorities,” for “recycling” carbon revenues.

It recommends that provinces take a “portfolio” approach to applying the new income, rather than merely offsetting it with other tax reductions to achieve revenue neutrality. Revenue might better “be reinvested into clean technology programs or toward transitional support to industries that a carbon tax impacts, such as oil and gas,” the Observer’s Charles Mandel reports.

The report urges provinces to set clear objectives to address “fairness and competitiveness concerns,” including buffering the impacts of a carbon tax on the poor, and to adjust those objectives over time.

“There’s a lot of opportunity here for governments. There’s a lot of options,” Ragan said. “There’s some trade-offs. That’s why the title [of the report ] is what it is: ‘Choose Wisely.’”