Thursday, December 18, 2008

Environmental Policy

Stephane Dion provided a poor vision for a number of reasons. One was that he posited that environmental policy should be a third pillar of the Liberal ethos, along with social justice and economic prosperity. In fact, it should not. It is important to elevate environmental policy only so long as we have a government that is not acting on it. After that, environmental policy is just another important policy among many. It does not have the stature of social justice or economic prosperity.

Secondly, the Green Shift was bad policy. Its justification, "Pay what you burn not what you earn" is wrong. Taxation cannot be shaped by one policy arm. Taxation must remain progressive, which means that it is based on income. The Green Shift (and the more radical all-consumption tax platform of the Green Party) can only approximate progressivity by building in a whole bunch of subsidies and exemptions that overly distort our society. For example, they propose that people who live in the country should get rebates or tax deductions for gasoline usage (to support good old country livin') but not provide any help for people living in subdivisions (who are by definition bad). As someone who has lived in the country, I can tell you that the majority of country dwellers live in subdivisions in small towns - so then, presumably, we encourage far-flung subdivisions but not close-in ones.

The Green Shift was also ass-backwards in taxing heating fuel but not gasoline. We need to increase the tax of gas at the pump, as Europe has done. That leads to smaller cars, less lengthy commutes, denser housing, more and better public transit, and - most importantly - more consciousness of the environment. It also gives us some protection from massive increases in oil costs, as we can alter the tax but not the price of a barrel of oil.

By putting forward an overly ambitious and fundamentally flawed environmental policy, Stephane Dion set back the cause of environmentalism: he let the PM win an election on an anti-environmental platform, thus giving him a sort of mandate to ignore environmental concerns. He also made it less likely that future campaigns will risk fighting for the environment.

Environmental policy should use the standard three areas of government muscle: taxation, regulation, and public education. Environmental taxation should take the form of "sin taxes," which are consumption taxes on things we want to discourage, such as cigarettes and booze. It shouldn't be a blunt sword but a scalpel, hitting specific activities, and the revenue should be used for providing alternatives to those activities, such as public transit. (Dion's approach of creating a revenue-neutral environmental tax was a sop to the old, flawed vision of "small government good, big government bad" that will be replaced very soon by the new vision of an active state).

The "Green Shift" is regressive taxation because the poor use a higher percentage of their income on consumption, and thus (under a consumption tax scheme) pay a higher percentage of their income in taxes. We should be moving in exactly the opposite direction: we should be increasing the progressivity of taxation by adding tax brackets at the upper end. Currently, the highest tax bracket starts at about $122,000, which is woefully out of date.

The fact that consumption taxes have become a mainstay of green parties around the world is further evidence that the environmental movement is being overly influenced by the right. The environmental movement has historically been in opposition to movements that promote social justice because there is a split between using public funds for the environment or to combat poverty. Both should be treated as valid and important interest groups, but neither should gain iconic status as a pillar of Liberalism.



Anonymous said...

environmental policy is just another important policy among many

ya, mundane stuff like cultural policy and inter-provincial relations

just another issue ... it is not like we are going to pass on an unlivable planet to our progeny or anything

why are you still on Liblogs?

Anonymous said...

You argue for increasing gas taxes which is regressive too.

Also, you don't say what you would do instead of carbon taxes or cap and trade (which is even more regressive, because it costs more). What do you propose if you dismiss putting a price on carbon emissions?

I think as long as carbon emissions are free, they are not going to go down. Since any form of carbon pricing is regressive, I think our tax structure needs to be changed (to make it more progressive) to accomodate this. But, if you have an alternative, I'd be interested in learning about it.

Yappa said...

Re the question about why I'm on Liblogs, I'm a member of the Liberal party, am active in my local riding association, and I'm writing about how we want to define the next Liberal government. Maybe you'd prefer if I spent all my time cussing at the Conservatives, which I have to admit I also sometimes do. ;-)

Anonymous said...

"It is important to elevate environmental policy only so long as we have a government that is not acting on it."

Yappa please re-read your comment above and ask yourself why Dion stressed the importance of sound green policy.

Yappa said...

Hi Catherine,

In tax theory, the terms progressive and regressive have particular meanings: regressive taxation takes a larger percentage of the income of poorer people. A gas tax doesn't necessarily do this, particularly if people are provided alternate modes of transport; if cities are built so that we don't need cars; and if we create a demand for low-cost, fuel efficient cars. (In Canada, the big American gas guzzlers are cheaper to buy than the little fuel efficient cars; in Europe, littler more efficient cars are cheaper.)

I did provide an alternative: a mixture of specific taxes/subsidies, regulation, and public education. These are old tools but they are not being utilized nearly enough. Regulation is particularly under-utilized. For example, why do we allow developers to build houses that have to have air conditioning, when slightly larger eaves and a few other changes could make that moot? Why don't we increase the number of vents required in a roof? Require an attic fan? And on and on. The building industry already has all kinds of codes: we just need to make them smarter.

In the car industry, we mandate fuel emissions standards but not fuel consumption standards.

Gutting our tax system for environmental reasons is wrong-headed, but also it's a waste of policy discussion because it's not going to happen.

Other than that, I think we're on the same side. ;-)

Yappa said...

To clarify what I meant by "environmental policy is just another important policy among many". There are many important policy areas, such as health, education and justice, which are also vitally important but are subordinate to the pillars of Liberalism rather than pillars themselves.

Brad Dillman said...

I think the difference between carbon tax and cap-and-trade is that a carbon tax has a known impact on prices but unknown impact on pollution, and cap-and-trade has an unknown impact on prices (who knows what credist will auction for?) but a known impact on pollution (the cap).

I'm pro-carbon tax, but I agree with your comments that is was beaten by an anti-environmental platform and we're worse off for it.

I also like the revenue-neutral premise of the green shift, and I think the proposed larger tax cuts to lower income brackets was an attempt to mitigate the regressive feature (IMHO).