When future historians retrace the rise and fall of carbon taxes in Canada, they may well conclude that last week was the point at which policy’s decline became irreversible.
That’s because it was the week when the Trudeau Liberals gave up insisting that a carbon tax is the best way to fight climate change.
There’s really no other way to interpret Environment Minister Catherine McKenna’s pledge not to raise carbon taxes beyond 2022. The pledge came in response to a Parliamentary Budget Officer report, which concluded the federal carbon tax would have to rise from the planned $50 per tonne in 2022 to $102 per tonne by 2030 for Canada to meet its Paris Agreement emissions commitments.
The PBO’s analysis simply cannot have been a surprise to the Liberals, least of all for McKenna, whose own department had warned her back in 2015 that carbon taxes would have to be much higher to work.
In an alternative history where the Liberals believed their own argument on the virtues of carbon taxes – the one they’ve been making for the last three and a half years – McKenna’s response would have been: we’ll raise it as high as it needs to go.
We all know why she didn’t. There’s a federal election in four months. The Liberals are struggling in the polls. One need not be a master political strategist to know that an overt pledge of future tax hikes is unlikely to improve their chances of re-election.
Liberals protest that they have other tools in their environmental toolbox. But, having long insisted that one tool – a carbon tax – works best, they are now in the awkward position of having to explain why they are switching to inferior tools.
If there’s any consolation for the Liberals, it may be that their credibility on the file can’t erode much further simply because it’s already so low.
A recent poll ranked Prime Minister Justin Trudeau third as the leader best suited to handle climate change, behind both Green Party leader Elizabeth May and Conservative leader Andrew Scheer.
Unfortunately for the Liberals, disavowing a higher carbon tax while leaving the existing one in place carries a lot of downside and no obvious upside.
Which leads to a logical conclusion: If the Liberals really want to change their fate, they should abandon their carbon tax altogether.
That seems unthinkable. But many historical turning points seem unthinkable until they happen. Think about this one.
For those who already oppose a federal carbon tax, freezing it does nothing to mollify them. Eliminating it, by contrast, effectively addresses their concerns.
Similarly, many swing voters, having already been burned by the Liberals’ broken balanced-budget promise and witness to their appetite for spending, simply won’t believe a promise not to raise it. Getting rid of it altogether, by contrast, provides concrete proof it won’t happen.
True, carbon-tax advocates will not be happy. But then again, they’re already reaching peak unhappiness: their chief complaint has always been that the federal tax is too low to be effective. More to the point, they are less attached to carbon taxes specifically than they are to the importance of robust climate change policies generally.
There’s even a national unity angle: killing the carbon tax would allow the Liberals to credibly say they have listened to growing concerns from parts of the country that were most vehemently opposed to it and pour some urgently needed water on embers of separatism.
The Liberals have decided their carbon tax is a lemon and are moving on to other climate change policies. So they may as well make electoral lemonade. It won’t solve all of their problems. But it would deprive opponents of a huge stick to beat them with – on a policy which they’re relegating to the dust bin of history anyway.
Aaron Wudrick is the federal director of the Canadian Taxpayers Federation