I haven't written about Stephane Dion's carbon tax idea, not since it was announced that he intended to make a carbon tax a cornerstone of a Liberal Party platform in the next election.

I wanted my thoughts to gel, to consider just what such a tax could do, good and bad.  I'm glad I waited, because as I began to peal away the layers, I realized that a carbon tax is really unlike any tax every imposed by a government.  It is guaranteed to succeed.

Liberal Party leader Stephane Dion is planning to promote a carbon tax as a good thing for Canada:

In an article in the latest issue of Policy Options, Mr. Dion wrote: "We need to put a price on carbon. We need to make the costs of damaging our environment immediately visible." The price of carbon, he added, "must increase over time."

The National Post's John Ivison reported back in April that Mr. Dion wanted to spend the summer selling the idea at political events across Canada. The Globe and Mail repeated the story this week, with the added idea that revenue from the tax could be recycled to taxpayers, making it "revenue neutral."

So a tax on carbon that grows over time.  Why?  To reduce carbon emissions, and so throttle back Canada's two percent contribution to worldwide carbon emissions that are causing, well, nothing.   Recent news reports point out that the consensus is that the data indicates that the Earth's temperature has not changed in the last two decades, and new computer models show this static situation is unlikely to change.

Of course the computer models can't be trusted.  Several scientific studies point to a cooling period in the future, and the computer models aren't predicting that.

OK, so maybe the underlying rationale for a carbon tax is weak, at best.  But let's put that aside.  What about the tax itself?

Taxes do one of two things. 

They raise revenue for the government to pay for the cost of some service deemed necessary.  The government takes money out of the economy to pay for the mail, health care, defense, and so on.

Taxes can also modify behaviour.   Sin taxes are the classic example.  Cigarettes are heavily taxed to encourage people to stop smoking.  Of course, if you continue smoking, the revenue is used to pay for the health care costs needed to cover the treatment for your future smoking-related illnesses.  Or at least that's the theory.

So how does a carbon tax work?

Well, according to Stephane Dion, such a tax will be revenue neutral.  What the government takes, the government will give back (to someone).  Let's take his word on that.  So then a carbon tax won't pay for any government service or function.

That leaves a carbon tax as a means of modifying behaviour.  And certainly that is how a carbon tax is being sold.

It's supposed to encourage us to emit less carbon.

But how do you do that?  Carbon emission is the price of civilization.  It's just physics.  We expend energy to create localized areas of increased order.  The cost is an overall increase in entropy -- the laws of thermodynamics demand we pay that price.  Since we use chemical energy derived from carbon-based compounds, entropy in the form of carbon pollution is the result.

Oh, there are some other choices.  We can derive energy using the other forces in the universe.  The force of gravity can be tapped using hydro power (the energy from falling water) but that only works where the geography allows it.  The weak nuclear force gives us radioactivity and from that, nuclear power plants, and from that, raging environmentalists.  The strong nuclear force is far stronger than the weak nuclear force (by 13 orders of magnitude) but until we have the technological breakthroughs we see in Star Trek with antimatter-based power, this force is simply not one we can use.

So frankly, we're stuck with electromagnetism as the force of choice, and carbon-based chemistry as the main expression of that force.

Why carbon?  Well, what else?  At the temperatures and pressures that exist on the surface of this planet, carbon has the right level of reactivity with other elements such as oxygen and hydrogen to provide a substrate for a wide range of interesting chemical reactions.  Indeed, that's why we're all carbon-based life-forms.  Oil is just the goo left over from carbon-based life-forms.

It really has a sense of inevitability about it.

So we're back to the original point of the carbon tax.  It's supposed to encourage us to use, and so emit, less carbon.

But this isn't like smoking.  I don't really have a choice.  No matter what I do, carbon is the part of the equation.  Carbon-based pollution is also the result.  I can't unilaterally switch to nuclear, for example.

On its own, a carbon tax can't really cause me to change my behaviour, at least not in a selective way.

Now here's where I had a realization.  A tax has an unfortunate side effect.  It takes money out of the economy and so reduces economic activity.  But we accept that so that we can have hospitals or a navy or whatever.  Or so that people will smoke less.

But a carbon tax won't enable the government to buy anything (or so the Liberals promise).  The Liberals will give the money back in the way of tax breaks, so someone will benefit.  I can't assume, though, that it will be me.  Indeed, if the carbon tax was going to be given back to me, why bother with all this?  But I can probably expect some of it back.

So a carbon tax won't fund government-built nuclear power plants.  I'll pay the carbon tax but eventually some of it will come back to me.

How does this solve the global warming problem?

Then it hit me.  It is about that unfortunate side-effect of a tax, a reduction in economic activity as money is pulled out of the economy, even if temporarily. 

That isn't the side effect of a carbon tax.  It is the point of a carbon tax.

And that's what makes a carbon tax unique.  No other tax I can think of is designed to make the economy sluggish.  Every tax has that effect to some extent, but that is the raison d'etre of a carbon tax.  Indeed, that explains why a carbon tax must grow over time, as Stephane Dion has promised.  A small carbon tax will have a minimal effect.  A large carbon tax, affecting the cost of everything, since everything we do uses, consumes, and emits carbon, applies huge downward pressure on all activity.

A carbon tax is literally a waste of money.  We have become too efficient in the way we convert money into economic activity and so into carbon emissions.  The carbon tax is grit thrown by the Grits into the wheels of the economy, causing it to grind along at a slower pace.

We work, add value, and are paid for our labour.  We spend that money, but thanks to a widely applied carbon tax (remember, just about everything has a carbon cost attached to it), we get less for our dollars.

Really, there is little we can do to benefit in a carbon tax economy.  Sure, some people might be able to take the bus instead of a car, but then the construction and operation of a bus consumes carbon too.  It's not just a consequence of a carbon tax affecting everything.  A carbon tax is supposed to affect everything.  You are not supposed to be able to win in an economic environment with a carbon tax, regardless of what carbon tax proponents tell you.  If you could, you'd be converting your personal wealth into products and services via carbon-based reactions, and that is what we're supposed to be stopping.

What does all this mean?  If a carbon tax is imposed, then if we can do with less, we put up with less.  If we can't, we work harder to earn more just to make up the shortfall.  If we work too hard and enjoy too much economic success, and start to reach the point at which we can afford to recover to our previous levels of entropy-generating carbon-spewing glory (at the higher price, of course), then Stephane Dion cranks up the carbon tax again (as he promised), and we get knocked back on our heels. 

Because that's what a carbon tax does -- it makes it harder to succeed.  Success is what is warming up the planet (assuming you are ignoring the evidence and believe the planet is warming up).  Stephane Dion's carbon tax is a success tax, applied to everyone who successfully does, well, anything. 

Success is a dirty word in Stephane Dion's Canada, covered with the sooty residue of our carbon-based reality.  Stephane Dion's carbon tax will ensure that none of us are too successful, no matter how hard we try.

Like I said, this tax is unlike any other tax I can think of.  It has no purpose other than to be a tax.  The government does not provide any additional services.  No one particular (and obviously personally and immediately detrimental) life-choice made by only certain people is being punished.  It taxes in order to be taxing, that is, to be a burden, and nothing else.

And maybe the planet will be saved.  But really, who thinks Canada's two percent contribution makes a difference?  Or that any drop in carbon emissions, assuming any actually occur, won't be overwhelmed by increased emissions in other countries?  Indeed, could any Liberal be audacious enough to promise that a carbon tax can save the Earth from warming that no one can detect?

So it is a tax that achieves nothing but to be a tax.

I guess, in a sense, it is likely to succeed, if only because of all taxes, Stephane Dion's carbon tax has the lowest possible expectations attached to it.

Posted by: Steve Janke at 10:39 PM | No Comments | Add Comment
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