Philip Cross: Last-gasp defence can't save the carbon tax
The April 1st implementation of another hike in the federal government’s carbon tax and the growing prospect that a Poilievre government will abolish the tax, have prompted its advocates to mount a last-gasp defence. Three hundred supporters (not all of them economists) have signed a petition in favour of it. Its backers also fanned out to argue for it in op-eds and numerous appearances on CBC, which willingly provided a soap box for one side of this partisan issue. But, far from being persuasive, advocates mostly demonstrated how little they have learned from their long-standing failure to sell the tax to many politicians and most Canadians.
Carbon tax proponents say it is the most efficient way of reducing greenhouse gas emissions. But their credibility was damaged early on by preposterous claims about British Columbia’s small post-2008 carbon tax having triggered a sharp drop in gasoline sales. In a clear case of hope triumphing over experience, a syndrome economists are supposed to be immune to, this was rationalized as households acting on expectations of future tax hikes.
Supporters of the tax then seized on the supposed B.C. precedent as evidence carbon emissions could be sharply reduced with just a small and largely painless carbon tax, despite abundant evidence that fuel demand is largely insensitive to price hikes. It later became clear lower gasoline sales in B.C. were due to the 2008 recession and cross-border fill-ups in Washington state at a time when the loonie was trading at parity with the U.S. dollar.
Today, its proponents do acknowledge a carbon tax will have to reach painful levels to meaningfully lower consumption. But their initial willingness to ascribe magical properties to the tax undermined
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