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Economists weigh-in on the value of carbon taxes

Pembina Responds to Harper and Layton on Carbon Tax Comments

Ottawa (11 September 2008) - Matthew Bramley, Director of the Pembina Institute’s Climate Change Program, made the following statement in response to both Stephen Harper’s claim today that “the new Liberal tax will plunge Canada into a recession” and Jack Layton’s renewed criticism of carbon taxes.

“Mr Harper and Mr Layton’s opposition to carbon taxes is contradicted by leading economics and business organizations who say taxing pollution is a good way to harness market forces to fight global warming.

There is no evidence to support Mr Harper’s claim that a modest carbon tax would cause a recession. In fact, Mr Dion’s proposed tax would need to be further increased to enable Canada to meet science-based targets for greenhouse gas reductions.

Unchecked global warming will cause immense economic costs. Canadians expect a fact-based debate about not just the costs of acting but also the costs of failing to act and failing to repair Canada’s damaged reputation on this issue."

The Pembina Institute will comment on the NDP’s environment platform when its full details are available.

Key quotes on carbon taxes by economics and business organizations include the following:

  • “Your government identified action on global warming as a critical policy goal. We believe that a carbon tax is the most efficient and effective way to reach that goal.”

— Letter to the BC Finance Minister from 69 university economists, October 2007

  • “There is no question that taxation can be effective in changing business and consumer decisions and behaviour. Environmental levies such as a carbon tax are transparent, making the price of emissions clear and consistent. They can encourage long-term investments in research and in capital equipment by establishing a known rate of return.”

— Policy declaration by Canadian Council of Chief Executives, October 2007

  • "The most effective and efficient policy that would result in deep GHG emission reductions is a market-based policy, such as an emissions tax, a

cap-and-trade system, or a combination of the two.”

— “Getting to 2050” report by National Round Table on the Environment and the Economy, January 2008

 

  • “Canada needs to go much further, much faster, in introducing a national, comprehensive, and coordinated system of green taxes that would set a price on greenhouse gas emissions. This GHG tax system should be implemented in tandem with a cap and trade system.”

— “Use Green Taxes and Market Instruments to Reduce Greenhouse Gas Emissions,” Conference Board of Canada briefing paper, February 2008

The Pembina Institute is a sustainable energy think tank.