With willing provinces

Copenhague - 15e Conférence de l'ONU sur les changements climatiques

Everyone can agree that Canada needs a national climate-change policy. But we also need a federal climate-change policy. The necessity for provinces to be willing partners in any national plan is a point that has been overlooked.
The comprehensive analysis released jointly by the Pembina Institute and the David Suzuki Foundation in October has so far dominated climate-change debate in Canada.
The Pembina-Suzuki report envisages a substantial redistribution of wealth via a carbon tax. Alberta would contribute as much as $24-billion a year to Ottawa by 2020. This money would then be spent or redistributed by the federal government in a variety of ways. A large portion would go to reductions in federal personal income tax. This would inevitably favour more populous provinces such as Ontario and Quebec at the expense of Alberta and Saskatchewan. Such an unequal situation would be inconsistent with the objectives of national unity.
The Pembina-Suzuki proposal yesterday elicited a sharp critique from the Calgary-based Canada West Foundation, saying that "it is a bad starting point for a national policy and a recipe for failure." Such sentiments must be addressed if Canada is to move forward in reducing greenhouse-gas emissions.
The provinces share with Ottawa constitutional authority over the environment and the fiscal tools to be used in regulating carbon emissions. In many cases, they have actually been the first movers. Quebec and British Columbia already impose carbon taxes, for instance. If a uniform carbon regime across the country is desirable, it seems clear the provinces will have to voluntarily take part in Ottawa's plan. So how to square the necessity of national climate-change policy with the realities of Canada's federal system?
A solution can be found in another paper released this week by the Institute for Research on Public Policy. "Clearing the Air on Federal and Provincial Climate Change Policy in Canada" argues that the secret ingredient required to make provinces full partners with Ottawa is a familiar one: cash.
While the Suzuki-Pembina analysis sees Ottawa as the recipient of the vast bulk of carbon-tax revenues, this is only one possibility among many. IRPP authors Tracy Snoddon and Randall Wigle of Wilfrid Laurier University argue convincingly for giving most, if not all, directly back to the provinces. Each provincial government would receive the full sum of carbon taxes collected within its borders with full discretion to use it as they see fit: provincial income-tax reduction, new technology, programs to ameliorate the damage done to certain sectors.
In a single stroke complaints about unfair regional redistribution would disappear. Carbon would still be taxed, but Canada's unity would not.

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