Liberal Party leader Stephane Dion has had to back down on a major portion of his carbon tax.  Faced with growing criticism from farmers, fishermen, and truckers, and the frustration of Liberal MPs who would lose votes from these groups, Stephane Dion is throwing money at the problem.

But not just money.  He's going to give farmers, fishermen, and truckers a subsidy that can only be applied to buy green equipment to replace existing equipment.  Which I'm willing to bet makes this an utterly useless subsidy.

Liberal Party leader Stephane Dion is promising to implement a "revenue neutral" carbon tax.  That is every penny that the tax raises will be returned to Canadians in tax cuts.

As Stephane Dion likes to say, it's all about taxes:

“We’ll cut taxes on those things we all want more of — income, investment and innovation — and we will shift those taxes on things we want less of — pollution, greenhouse gas emission and waste," Dion said in a campaign-style speech.

So a farmer has to pay more for diesel fuel for his tractor.  Not a problem, because he gets a tax cut to compensate.  Same for the fisherman putting fuel in his boat, and the trucker filling up to haul to load.

See?  It's revenue neutral.

Yet, for some reason, farmers, fisherman, and truckers weren't buying it:

Liberal Leader Stéphane Dion is changing his controversial carbon tax plan on the eve of an expected election campaign amid pressure from his caucus members.

The policy will now incorporate breaks for farmers, truckers and fishermen in the form of subsidies to help buy equipment to reduce use of diesel fuel.

Mr. Dion will announce the changes in his plan regarding the farming sector today in Winnipeg, where he is attending his national caucus summer retreat. The subsidies to the other sectors will be announced later, sources said.

Liberal MPs, especially those from the Atlantic, had been pressing him to include cash rebates or complete exemptions for these sectors because of the high costs of diesel fuel.

Whoah now.  Subsidies?  But then that means they don't the tax cut, right?  Just to keep it fair and even for everyone, right?

Actually, they keep the tax cut.  And they'll keep the Green Rural Credit that was already in the plan:

That is why we will provide specific assistance to rural Canadian taxpayers as they adjust to the higher price of carbon. In addition to the significant tax measures already described, every rural Canadian tax filer will receive up front, each year, an annual Green Rural Credit of $150.

And now they get a subsidy as well?

What happens when the next special interest group screams for a bigger piece of the pie?  Another rebate?  Another subsidy?

And who is going to find that the tax cut they got was less than they had hoped, or that the carbon tax is costing them more than was expected, so that Stephane Dion can fund this new subsidy?  Whose tax cut is going to be rolled back when the subsidies and rebates and other green bribes that Stephane Dion will hand out start to outpace revenues pulled in by the carbon tax?

And remember, revenues will go down.  Heck, this new subsidy is designed to make farmers, fishermen, and truckers use less fuel:

The Liberal insider said that Mr. Dion absolutely rejected suggestions of an exemption or cash rebate to the three sectors, arguing that it would considerably weaken his plan.

"A cash rebate doesn't give you the incentive to reduce," the insider said. "If you can buy equipment, new technologies in your engine and other things that will help you reduce your consumption, that will bring your cost down."

So if their consumption goes down, that means less revenue, and that means less money for tax breaks, rebates, and subsidies.

But then maybe not, because no one has explained what the subsidy to farmers, fisherman, and truckers will actually buy.

The insider said it himself:

If you can buy equipment, new technologies in your engine and other things that will help you reduce your consumption, that will bring your cost down.

If?

So what is this new technology that farmers, fishermen, and truckers can invest in, exactly?  A new hydrogen-fuel engine for your tractor?  A windmill for your boat?  A solar-powered 18-wheeler?

These are high-power machines.  There is a reason they use diesel engines.  The power output of an internal combustion engine, pound for pound, outpaces just about anything.  I don't know of any so-called green power source that can provide the power needed for these applications.  As for efficiency, I bet many of them are working near the practical limits of efficiency for these sorts of engines.

No one has identified what technological options farmers, fisherman, and truckers have.  I'm guessing they don't have any.  But that doesn't matter.  They get a subsidy to buy these phantom solutions.

That ought to shut them up.

And I won't even get into the uselessness of a subsidy that covers only a portion of the cost of new equipment, assuming this equipment even exists, when you are still amortizing that new diesel tractor you bought two years ago.  Financially, I doubt many farmers, fisherman, and truckers are in a position to just dump existing equipment for new stuff ahead of the imposition of a carbon tax on diesel fuel.

There was a reason the farmers, fisherman, and truckers were looking for cash or an exemption.  For the time being, technologically and financially, they are stuck with their diesel-powered equipment.  The cost of diesel fuel would go up, if Stephane Dion gets his way, and they feared the tax cuts would not cover the increase (probably out of a healthy suspicion that the tax cut would amount to just about nothing, as tax cuts usually do).

Farmers, fishermen, and truckers aren't going to get any real help if Stephane Dion gets his way.  Just useless promises that solve nothing.

Update: The Canadian Trucking Alliance has rejected the "adjustment" to Stephane Dion's carbon tax plan.

Posted by: Steve Janke at 12:35 PM | No Comments | Add Comment
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