A new study released Tuesday by the Fraser Institute shows the federal government’s plan to impose a $170 per tonne carbon tax in place nationally by 2030 will cost Alberta’s economy more than 30,000 jobs. .“The federal government has said the higher carbon tax will have ‘almost zero’ impact on the economy, but in fact, a tax of that magnitude will have significant effects on the economy and Canadian workers across the country, including in Alberta,” said Ross McKitrick, a Fraser Institute senior fellow and author of Estimated Impacts of a $170 Carbon Tax in Canada..The study also finds a second carbon tax will cause a 2.1 per cent drop in Canada’s Gross Domestic Product (GDP), which in 2019 would represent a loss to the economy of about $44.1 billion..There will also be a net loss of over 200,000 jobs, even after taking account of jobs created by new government spending and household rebates of the carbon charges. .The federal government’s Healthy Environment and Healthy Economy (HEHE) plan intends to phase in the carbon tax over nine years..Unlike previous cases when the government proposed significant policy changes, it has not released any quantitative economic analyses of the plan’s impacts, except to claim that the policy will not affect GDP. .This claim is at odds with numerous previous analyses of the costs of greenhouse-gas emission controls made inside and outside the federal government during discussions of the Kyoto Protocol..Alberta’s economy is projected to contract by 2.5 per cent..Despite the carbon tax rebate, the average Canadian worker will earn $1,800 less in annual income due to the $170 carbon tax..For labour supply and demand to balance after introducing the carbon tax, the Fraser Institute predicts a 2.8 per cent decline in wages. .However, the carbon tax rebates offset much of that loss, so actual household consumption only declines by 1.3 per cent. .They estimate that a carbon tax of this magnitude would result in a 26 per cent reduction in carbon-dioxide emissions – a far cry from Paris Climate Accord targets. .A constant-dollar carbon tax of $240 per tonne would be required to achieve 2030 emission goals to reach those targets. It would need to increase continuously after that to keep emissions constant in the context of a growing population..“Many previous studies, including some from the federal government itself, have shown that a large carbon tax will have major negative impacts on the economic well-being of Canadians,” said Elmira Aliakbari, director of natural resource studies at the Fraser Institute and study co-author..Our new study confirms these earlier findings. The government needs to be transparent with Canadians about what the real costs of this policy are likely to be.”.Introducing the carbon tax will cause rather pronounced reductions in revenues elsewhere in the tax system..The government will not be able to refund household carbon-tax payments to the extent promised without going into a deficit. .The net increase in government revenue will only cover about 20 per cent of the carbon taxes on final demand..If the government intends to rebate 90 per cent of the revenue and use 10 per cent to increase spending elsewhere, it will add about $24 billion annually to the consolidated government deficit..Dhaliwal is a Western Standard reporter based in Edmonton
