Commentary

How Carbon Pricing Has Our Family Laughing All The Way To The Bank

(Image: iStock)

Carl Duivenvoorden is a speaker, writer and sustainability consultant living in Upper Kingsclear, New Brunswick.

If you believed only Conservative politicians, special-interest groups and certain media outlets, you might be inclined to think that the new carbon tax imposed by the federal government will put us all in the poorhouse.

Well, I’ve done some basic math, and, three months into carbon pricing, the truth is that our family is coming out way ahead.  That’s right: we’re financially better off, thanks to the carbon tax.

Gaining from a tax?

It seems illogical, but it’s true.

That’s because the carbon ‘tax’ isn’t really a tax; it’s more accurately a fee-and-rebate incentive.

The ‘fee’ is the extra money we are now paying for gas or diesel (4.4 cents/litre), heating oil (5.4 cents/litre) and natural gas (3.9 cents/M3), to encourage us to use less.  

The ‘rebate’ is the amount every NB family received on their recent income tax return (see Climate Action Incentive, line 449).

We don’t have any control over the rebate we get because it’s a set amount and is about the same for every family.  But we do have control over how much we pay in fees, because that’s directly proportional to how much fossil fuel we choose to burn.

Here’s another way to understand it.  Say that, in an effort to reduce consumption of sugary drinks, the price of a case of pop was increased $5 – but at the same time every shopper received a $5 rebate to apply to anything in the store.  Devoted pop lovers could use their rebate to offset the increased price of pop, so they’d be no worse off than before. Frugal shoppers, however, would probably turn down pop and use their rebate on something else, so they’d come out ahead.  And the desired objective – reducing the consumption of sugary drinks – would be achieved.

Economists – including conservative economists – widely agree that putting a price on carbon is the fairest way to tackle climate change, because it makes polluters pay in accordance with how much they pollute.  (I’d bet most ordinary people agree with that principle too.) It’s also a far cheaper program for governments to administer than complicated alternatives like regulating industries.  

But two key conditions must be met for carbon pricing to be successful: the price should start low and increase gradually, to allow time for people and businesses to adapt; and all revenue should be rebated equally back to taxpayers.  NB’s new carbon price meets both conditions.

Our family’s numbers

Since April 1, the three drivers in our family have collectively driven about 15,000 kilometres.  That’s probably more than the average NB family, I’m sorry to acknowledge.

But our two vehicles are very efficient: a hybrid and a plug-in hybrid (both were purchased used; neither was break-the-bank expensive).  In total, they’ve burned 460 litres of gas since April 1. Multiplied by 4.4 cents/litre, this means our family has paid $20.25 in carbon fees over three months.  Estimating forward, that will equal $81 after 12 months. (We don’t use heating oil or natural gas.)

On the other hand, the rebate I received on my recent income tax return was $246.40.  So I’m paying $81, but getting $246.40. Three dollars in my pocket for every one I spend.

Choices

Our family’s vehicles and home are very efficient, and we heat with wood.  So maybe our margin of return isn’t attainable for everyone.  

But a decent return is.  Canada’s non-partisan Parliamentary Budget Officer has concluded that 80 per cent of New Brunswickers will receive more in rebates than we pay in fees.  And most of us can increase our margin by making wise choices about our personal transportation and home energy usage – which is the goal of carbon pricing in the first place.  

So why not ignore the naysayers, look at your fossil fuel consumption and contemplate the changes you can start making today.  Then you too can laugh all the way to the bank.

Huddle publishes commentaries from groups and individuals on important business issues facing the Maritimes. These commentaries do not necessarily reflect the opinion of Huddle. To submit a commentary for consideration, contact editor Mark Leger: [email protected]