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Martin Laplante

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Fri, 24 Oct 2008

Canadian Business Prefers Carbon Tax

It is stating the obvious, for economists anyway, but Canadian Business prefers a carbon tax over cap-and-trade. Liberals and Greens were proposing a carbon tax while Conservative, New Democrats, Republicans and Democrats are proposing cap-and-trade.

"The Liberal plan would have had some positive economic and environmental impacts," according to Canadian Business. Presumably the similar Green proposal would as well. The biggest problem for businesses, without even mentioning the greater bureaucracy required for cap-and trade is that while both a carbon tax and cap-and-trade amount to a "tax on everything", which increase carbon prices, under cap-and trade "they will still be variable, and that will impose risk to businesses - especially those needing to make technology investments that will take a long time to implement. That's why many businesses would have preferred a carbon tax."

Meanwhile, provinces have stepped in to act where the federal government hasn't. The 4 major provinces, Alberta included have each implemented pricing mechanisms. "Given the inefficiencies arising from multiple and complex schemes, with all their exemptions, allowances, offsets and technology slush funds, we already know they will impose substantial costs on the Canadian economy." The publication also points out that without a carbon tax, governments do not have the revenue source required to offset higher prices with other measures.

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