Secret government study backs $50 carbon tax

20 June 2007 - 1:32pm

A $50/tonne tax on carbon would have an insignificant impact on the Canadian economy. OTTAWA – A secret report to the federal government from a world renowned energy economist, obtained by the Green Party under the Access to Information Act, concludes that a $50/tonne tax on carbon would lead to reduced greenhouse gas emissions and have an insignificant impact on the Canadian economy. The Study, undertaken for Natural Resources Canada by M.K. Jaccard and Associates (MKJA)*, calculates the impact of carbon taxes of between $10 and $250 per tonne of carbon dioxide equivalent (CO2e) beginning in 2006 and applied throughout the economy at a single rate. The Report – Cost Curves for Greenhouse Gas Emission Reduction in Canada: The Kyoto Period and Beyond – concludes that the GDP impact of a $50/tonne tax shift is less than 0.1% of GDP per year until 2010, is virtually zero during the next five years and is then positive after 2015 (see chart below). “Mr. Harper and Mr. Baird may continue to spread fear that a carbon tax will cause economic calamity, but they know this is not true,” said Green Party leader Elizabeth May. “In fact, this report shows a positive impact on GDP beginning in 2015. With this report now in the public domain, Canadians know that Harper knows. “The Prime Minister should now explain to Canadians why, in the face of this compelling evidence, his government stubbornly refuses to consider the carbon tax option. And leaders of the other parties should explain as well.” In remaining doggedly opposed to even considering a carbon tax, the Conservative government ignores a growing international consensus among leading economists (see what experts say in attached backgrounder) and a government-commissioned study contradicting their warnings of economic meltdown. Earlier this month, the Green Party of Canada called for a $50 per tonne carbon tax shift – with matching cuts in income and payroll taxes – as the cornerstone of a comprehensive plan for a green energy future that will reinstate Canada as a leader in the global campaign to prevent catastrophic climate change. “At the time, Environment Minister Baird saw fit to deride our plan as ‘the mother of all tax increases’ even though we propose a tax shift with no net increase in revenue,” said Green Party leader Elizabeth May. “It’s another example of the government’s willingness to deliberately mislead Canadians in support of its ineffective and widely discredited climate change policies.” Explanation of GDP Impact (Table 6 in MKJA Report) The GDP impact shown in the Report is cumulative, meaning it is the sum of the impact on GDP for that year and all prior years. The below chart is based on a $50/tonne carbon tax shift.

Millions of 1995$	Cumulative GDP Loss	Change from prior period	Change/year	GDP (1997$)	Impact per year as % of GDP
2010	4,773	- 4,773	- 1,193	1,326,000	- 0.090%
2015	4,889	- 116	- 23	1,464,011	- 0.002%
2020	4,551	+ 338	+ 68	1,616,387	+ 0.004%
2030	3,829	+ 722	+ 72	1,970,366	+ 0.004%

To download the report and supporting documents go to www.greenparty.ca/carbontax. For details of the Green Party’s climate change plan – A New Energy Revolution to Avert Global Catastrophe – go to www.greenparty.ca/climate. Supporting Documents:

* MKJA principal Dr. Mark Jaccard is a professor in the school of resource and environmental management at Simon Fraser University and one of Canada’s leading environmental economists. His advice is regularly sought by federal government agencies and policy think tanks.