The Carbon Tax Comes To Canada!
Between $12B and $15B could be collected in carbon taxes by 4th year!
Liberal Leader Stéphane Dion's new carbon tax plan calls for $11 billion in personal income tax cuts, exemptions on new taxes for aviation and diesel fuel for the first year, and extra help for vulnerable Canadians, CBC News has learned.
The plan, to be called the "Liberal Green Shift" and due to be unveiled in Ottawa on Thursday, includes about $15.5 billion tax cuts in total, according to Liberal sources.
As CBC News has already reported, the four-year plan will include controversial new taxes on emissions that will rise over time to try to reduce the use of fossil fuels by Canadian industries and homeowners. Tax breaks, however, will be offered to corporations and individuals to make the measures revenue-neutral for the federal government.
The 40-page document, sources said Wednesday, is expected to outline a one per cent reduction in both the general corporate tax rate (to 14 per cent from 15) and the small business income tax rate (to 10 per cent from 11).
The plan will also offer the following personal income tax cuts, as people pay more for heating costs, food and other items:
- A 1.5 per cent rate reduction for the lowest tax bracket (the first $37,885 of taxable income), to 13.5 per cent from 15.
- A 1 per cent rate reduction for the second-lowest tax bracket ($37,885-$75,769), to 21 per cent from 22.
- A 1 per cent rate reduction for the bracket between $75,769 and $123,184, to 25 per cent from 26.
No new taxes are expected on gas for cars, trucks and buses, and special help is expected to be offered for low-income Canadians to buffer the higher prices they will have to pay for goods and energy.
Other details confirmed by CBC News sources Wednesday include:
- A moratorium on new federal taxes on aviation and diesel fuel for the first year of the program.
- Extra help for low-income Canadians in the form of tax credits so they will get money back to help pay for the higher cost of goods, even if they report no income on their tax returns.
- Additional help for rural and northern Canadians to help soften the blow of possibly higher costs.
- Assistance for non-profit groups that may face a crunch — for example, women's shelters that have to pay significantly more to heat their premises.
- New tariffs on goods imported from countries that have no carbon taxes, as a way to even out higher costs for similar goods produced in Canada.
- Enriched tax breaks for companies using and inventing green technologies, to encourage research and development as well as investment.
If these details are confirmed when Dion unveils the plan Thursday, the carbon tax will provide between $12 billion and $15 billion in revenue to the federal government in the fourth year of its implementation.
'A lot of winners and a lot of losers'
Since word of Dion's carbon tax intentions started to emerge this spring, critics have jumped on it as a tax grab that will unduly hurt the ability of Canadian businesses to compete and thrive.
Prime Minister Stephen Harper took a jab at the anticipated Liberal plan in the House of Commons Wednesday.
"What we will not do — and what will clearly hurt Canadian families — is to go around imposing carbon taxes at this time on all kinds of fuels," Harper said, adding that the leader of the Opposition told his own party during the leadership race that he would never impose a carbon tax.
Conservative MP Jason Kenney later chimed in that if the Liberals succeed with their carbon tax plan, Canadians are going to be "shift out of luck."
TD Bank chief economist Don Drummond analyzed the plan and said the carbon tax is good idea, but added it is going to hit some harder than others.
"I think it will be revenue neutral, but there will be no individual or company in the country that will exactly get back what it pays back in carbon tax," Drummond told CBC News on Wednesday. "There will be a lot of winners and a lot of losers."
In another development Wednesday, Elizabeth May, leader of the federal Green party, unveiled a carbon tax proposal that also proposes significant tax cuts to ease the pain of higher costs for fuel, food and manufactured goods.
May's plan would bring in an estimated $40 billion in new federal tax revenue, since it would include new taxes on gasoline for cars, trucks and buses.
June 18, 2008 - source CBC News