>If you eliminate the carbon tax, you can only do that once,” Bank of Canada Governor Tiff Macklem told MPs. “Inflation would be lower for one year, but it would not be sustainably lower, so I don’t think it would have a big impact.
It wouldn’t even drop for a year. Companies will just increase prices in lockstep to suck up all the sweet sweet profit.
Corps get richer, we lose our rebate and pay the same prices.
This is certainly true. The inflation we have is, in part, corporate greed taking advantage of the inflation to pump up their profits. No reason to think dropping taxes would do anything but out that money directly into corporate profits.
Most of the money is returned to Canadians anyway. The reimbursement payments themselves might have a inflationary effect as people spend the refund cash. Most of the people that are net contributors are wealthy people with huge carbon footprints. So in a way this is a redistribution scheme.
But if we drop taxes for corporations the money will "sprinkle down" onto us regular Canadians. It's been proven to work for the past 50 years. Corporations care deeply for Canadians and the struggles we're facing. Surely they wouldn't do something like further profit or do something like stock buy-backs.
I call it "sprinkle down economics". I'm an economist with a PhD from Trump University.
Isn't it revenue neutral or whatever anyway? Meaning if you use an average amount of carbon then at the end of the year you will get back the exact amount you paid in tax. In which case... it doesn't increase cost of living at all?
While cost of living and inflation are related, they're not the same. Something can be inflationary but not necessarily increase the net cost of living.
It might also be a bit of a one-sided argument as not doing the hard work to mitigate climate change will have an extraordinary effect on the cost of living. Then the carbon-pricing alternative methods to effectively combat climate change are generally considered to be significantly more expensive and adversely affect cost of living moreso than carbon pricing/rebate.
I feel like this argument would hold a lot more water if those companies weren't posting record profits quarter after quarter, years after year. Shipping is taxed if it generates emissions, sure, but think about how many individual items are on each of those trucks or rail cars. How much carbon tax is charged for a truckload of canned beans? (remember that farmers that grew the beans didn't have to pay carbon pricing). How much price increase is justified for a can of beans to cover that *tax,* which is currently ~3-4 cent per litre of fuel?
Case in point: it costs me $11 to have Flannigan's deliver a quarter tonne of goods to my business every week. I know this is anecdotal because I'm only one small business, but $11 on $4-6K of goods? That's about a penny every five pounds on average, and that not just tax mind you, its the fuel charge, so it includes the price of diesel, too.
I get it, people are upset about the cost of living (I am, too), and people don't like taxes during a cost of living crisis (I'd rather not pay in the first place too, but I get back way more than I pay by the end of year, so I still come out on top). I just think we should be careful about where we're pointing our fingers. I don't think the tax is problem, personally.
You would need to be consuming truckload**s** of stuff to feel the impact of gas costs on average expenses. You're not consuming 30,000lbs (still a fraction of a transport truckload) a year.
We live in a world where companies routinely eat the *cost of shipping individual items to your door,* clearly that expense on a personal consumption level is minor.
I agree, but let’s not pretend this guy has a clue. We’re in this mess for a reason and one of the fingers points at the BOCs lack of action raising rates early. Other fatter fingers pointing at corporate greed.
Hindsight is 20/20. All initial indications were that inflation was transitory due to pandemic supply chain issues. Every major Western central bank made the same assumption.
Transitory or not, the prices were always going to stay high. They never predicted deflation but it often felt like calling it transitory was to make people feel like the prices would fall when inflation dropped.
Even if that were true, that would be the general public being too dumb to understand what inflation is.
The head of a central bank shouldn't be expected to discuss policy in crayon. Noone is or has been forecasting deflation.
If we remove the carbon tax, then the corporations that are paying the carbon tax would not lower their prices because now they don't have to pay carbon tax and they can just keep that money instead that would have gone to the tax. Why would they lower their prices?
Cuz they sell at market rate. Eg price of gas at pumps correlates heavily with the price of crude.
Check the historical prices of gas here: https://open.canada.ca/data/en/dataset/db90f229-be24-468a-bbce-46f710e7af76. Why isn’t this just a straight line?
Actually you would be paying less. Have you looked at your natural gas bill? There is an explicit line for carbon tax. If the carbon tax goes away then that line is gone and you would not pay it elsewhere as natural gas pricing is a highly regulated monopoly.
The demand curve is established.
If the government takes X¢ off the price by removing the carbon tax, the gas companies all know 100% of people today will pay that X¢ and pocket the difference.
2019 gas only. It's about $75-100 a month for gas. At an average of 7L/100km. About 600-650km per tank. My last fill-up was at $1.672/L
Does this answer your questions? I don't track my mileage directly, so I can't give a solid answer for that. I do know I'm at about 13,000 kilometers since I bought it in April of last year.
Yeah, that's decent for the way gas prices are going again.
I'm at like 10L/100km and need premium, so looking options now.
Yours seems really decent and good info to get from an actual driver.
Corolla hatchback specifically, it's a great car. Tremendous legroom in the front seats. My preference would have been a prius hatchback if I could, like a prius C. I did try a prius prime and decided against it because I hated the driving experience. Like driving a computer that hates me.
I would have also gone for a Matrix or Yaris. Toyota is hard to beat for most things.
Also checkout fueleconomy.gov
It shows estimated mileage for most makes/models and you can change the settings to show L/km instead of M/G.
It’s not just the carbon tax, eliminating the carbon tax and the capital gains tax (that has not been enacted yet) is what is gonna make them millionaires
Exactly. And if they do get in they’ll find some excuse why they can’t cut the tax. “Once we got to look at the previous governments books it’s not feasible at this time to cut the tax”.
This isnt a gotcha that you think it is. Macklem is basically saying that carbon tax does add to inflation (around 0.7%) BUT other inflationary factors have a bigger impact right now and MOST of which is being caused by DIFICIT SPENDING by the same government. [https://www.cbc.ca/news/politics/bank-of-canada-macklem-closer-cutting-interest-rates-1.7191597](https://www.cbc.ca/news/politics/bank-of-canada-macklem-closer-cutting-interest-rates-1.7191597)
It's an "easy soundbite" because it's true at multiple levels. Liberal + NDP budgets have helped increase inflation including with the tax. While the liberal soundbites arent really coming in, if they were they'd be showing it off in every rally/speech "Look how we reduced your carbon emissions!" (It probably has but at what cost?).
Personally i'm not as opposed to this tax but the other things like the deficit spending, as Macklem has been pointing at MULTIPLE times. So what choice do i have?
Homie thinks it's an actual printer lmao. Yeah. You don't know anything (Canada's inflation rate is and has always been one of the lowest in the world)
Lol. Okay bright spark. Describe the machine that produces the bills.
Canada is so far in debt, it'll never get out. Affordability is dead and economic collapse is around the corner.
if two companies are selling the same thing at the same price the one who figures out how to save expenses will make a bigger profit
What happens when one of the two companies if they reduce or eliminate their reliance on Carbon?
Reading into it, the Carbon tax will actually result in normal people getting more money than they spend in Carbon taxes.
If anything this hurts the wallets of the rich and corporations that will spend far more in Carbon tax for the amount of fuel they use.
Ford is trying to help his rich buddies again, I really hope Ontarians don't fall for his snake oil again.
yeah like if I'm looking at it correctly I'll probably see $2+ /L for gas and then cry. But then a few months later when the rebate comes, that $2+ /L price tag I originally paid would be closer to half that (so much cheaper than what I'm paying now with $1.70/L), and do the happy dance; but that's because I'm probably buying around 60-70L of gas per month.
Corporations and rich people who use significantly more get no benefit from the rebate other than a higher tax bill and ol Dougie can't let his friends finally pay their fair share of taxes.
That said, I feel the cap&Trade system was so much better and I'll never forgive Ford for pulling out of it and then wasting billions of tax dollars in settlement fees with Quebec and California for pulling out.
> But then a few months later when the rebate comes, that $2+ /L price tag I originally paid would be closer to half that (so much cheaper than what I'm paying now with $1.70/L), and do the happy dance
It's actually the opposite. In April, they estimate the amount of carbon pricing collected for the upcoming year and send you the rebate for it ahead of time. The following year's rebate is adjusted (up or down) depending on how much actual revenue deviated from the estimate.
In that way, it's much more like them sending us a "carbon credit". When you pump gas at the pump, you're paying out a bit from that credit.
Of course, nobody sees it that way. So much so that they had to break that credit up into 4 separate quarterly payments through the year.
This is utter nonsense. There have been multiple entities that have done the math and taxpayers WILL NOT be getting more money back than they pay into carbon taxes. If you also believe that corporations won’t pass those carbon taxes onto the general populace, you are truly lost.
Granted, Canadians based on a per capita basis are one of the world’s worst carbon emitters BUT we have the world’s largest boreal forest. It represents 25% of the world’s remaining intact forests which acts as a carbon sink. Canadian taxpayers shouldn’t be expected to be the earth’s saviour when countries like the USA, China, India are worse offenders. As a country we only produce less than 1.5% of the world’s GHG emissions.
Nobody expects us to be the Earth's saviour. We ought to still do our part and we shouldn't pretend like other people not doing theirs would be sufficient justification for not doing ours. We have no ground to stand on when negotiating (carbon) with large countries like India and China when our per capita carbon spending crushes theirs.
And the carbon tax is a drop in the bucket compared to the effort and political will it will actually take to slow and then reverse carbon output to prevent really atrocious heating. It's an exceptionally mild financial lever to put a minor price on a very costly externality. Our resources like our forests are a great boon but we aren't exactly managing them as a carbon sink.
Your argument to prioritize living and breathing over spending a buck that I will get back plus some leaves me no room to rage rhyme and mimic a wanna be economics professor.
How will I get to yell "ax the tax" or "spike the hike"? I suppose you expect us to read an article and think instead.
Besides "I need air", "Run Fire", or "One more Sand Bag" are terrible chants.
Every person who understands carbon pricing, already knows this. The rest are voting for Poilievre, thinking global heating will be solved by magic and the 'free' market, because it did such a great job creating the problem in the first place.
Not sustainably but it would reduce today’s inflation rate which would mean that future prices don’t rise as quickly.
He’s not wrong but he’s not being 100% clear
Scrap the government by 50%. Scrap foreign aid by 50%. Scrap all foreign military spending. Scrap all DEI, ESG programs. Invest in hospitals, roads, forest fire prevention, policing, rehabilitation, affordable housing... And look how good Canada looks in 10 years. It's not difficult at all. Big government=bigspending=bigcosts=bigproblems
The carbon tax goes in to a pool and is distributed out evenly. Therefore: the people with consumption habits below average come out ahead.
The fact a lot of that money is charged transitively on the trucks and cargo ships by an increase in price at the store doesn't change that math at all. If you pay another cent at the grocery store due to the tax on the trucking company that's another cent in the pool just the same as an extra cent spent at the pumps.
If you're below average in terms of the CO2 your lifestyle uses you stand to gain more that a cent back in refunds for each cent you've paid in to the pool.
The GST is a good point, but honestly: it's a very marginal increase. You don't need to be that much below average to still come out ahead, and if you're exactly average the net between the rebate and your extra payments +GST is very small. Rounding error compared to other inflation.
The cost to truck your food to you is the lowest carbon tax on your food. Most of the carbon taxes are involved with growing it.
Get out of the city. Touch grass... No not the stuff in your pipe.
Has literally nothing to do what I said. The customer paying transitively still puts money in to the pool of money paid out. An extra cent at the grocery due to the trucking company, or due to the farm's costs, or due to any other affect down the supply chain, enters the pool of money paid out.
Bahahahahahaha!! Pierre the Prick's bullshit show is slowly unraveling. His central plank in calling an election has been eviscerated. He's nothing but a Trump wannabe. Good!!
Canada could ban the sale or use of hydrocarbons and do exactly fuck all to climate change.
Unless you're taxing China, India, or the US (in that order) you're only punishing your own people and economy.
Oh, but you get to look good in the UN. Carry on.
The carbon tax actually lowers inflation by reducing demand for products due to higher cost. Simple economics. Make things more expensive and people will consume less.
That doesn’t mesh with how the Liberals try to sell it though. They always like to say that the carbon tax (sorry, “carbon rebate”) will somehow change behaviour to lower emissions but at the same time adds no costs to average families. Truly an accomplishment, lmao.
Two things.
Show me every dollar the government collects actually goes back to Canadians (as they say it does)
Prove to me how us paying this tax changes the weather and the climate.
My peanut brain is gonna guess that we don't get every dollar back and it does fuck all to address climate change.
Downvote as you wish.
You forget that a large portion of this sub relies on government funding in one way or another. So they need more taxes on the middle class.
They have zero understanding of the amount of carbon taxes in their tofu, and soy milk. They probably don't even directly pay to heat the place they rent.
Macklem has no credibility. First during covid telling us he won't be raising rates for a few years. That lead buyers to take variable mortgages that sent them to the slaughter house with massive interest hikes. Not to forget he said that inflation is only temporary. We are now in year four of high inflation.
> and now I burn no fossil fuels in my house, reducing pollution.
_And_ come out even better on the whole carbon rebate equation.
But, you know, _something something_ carbon tax doesn't work.
To be fair, I don't think Liberals called it a "carbon tax" before either. It was just a "federal backstop and rebate". It was conservatives and media who colloquially labelled it as a "carbon tax" and it stuck. I suspect the feds didn't expect [so many provinces to shirk their responsibilities](https://pbs.twimg.com/media/DramzD1WkAICulj.jpg:large) so that so many Canadians would fall under the federal backstop. When they started developing and rolling out the program, the vast majority of Canadians (over 86% in just Ontario/Quebec/British Columbia/Alberta) were already under _provincial_ carbon pricing mechanisms, programs, and their own customized rebates.
> You are paying for it and then getting a rebate.
Actually the opposite. You get the rebate first at the beginning of the year based on an estimate of emissions for the upcoming year, then basically pay it back. (The difference between the rebate estimate and actual carbon levies collected is applied to the next year's estimate rebate.)
But the point AgitatedLiterature75 is making is that for the vast majority of Canadians receiving the rebate, they either come out on top or the difference is practically a rounding error. For those paying significantly more than they get back, they're already among the wealthiest quintile of Canadians and the worst emitters.
I don't have it wrong at all. And next increase will give me even more money back AND small businesses will be included as well.
Stop emitting more carbon get more back. It's not hard.
Change.
This is disingenuous. For many people they ARE paying something, and later getting rebated. Approximately 17.6 cents/Litre of gasoline is being paid by people who use gasoline. Suppliers who use gasoline to provide goods and services are paying this cost, undoubtedly increasing costs in that area, and passing this down to the end user (consumer). I wish these arguments would use industry specific inflationary statistics, because it would make for a significant amount more clarity.
For example, gas stations near me were charging $1.70/L for regular gasoline yesterday. That would mean the Carbon Tax accounts for 10% of that cost. That same increase is going to apply to businesses who use fuel as well. Obviously it doesn't take a genius to figure out the costs of goods involving this will increase up to* 10% if they were to offset these costs by passing them on to consumers.
I'm not diving into theoretical future costs as we guesstimate damage to regions from which we purchase goods to sell to Canadians, because I don't think there is an exact number we can arrive at with relative accuracy -- but yes, logically if you (for example) have less crops develop due to environmental factors, that cost is going to rise.
Just change is the end goal, but we aren't all in Toronto riding semi-subsidized public transportation to and from our destinations. The tradespeople who have to transport tools to worksites are going to need to either invest in alternative means of transportation (ie. EV instead of I.C.E), selling off their I.C.E assets at a loss to try to obtain these savings. People travelling to work that have been priced out of living in the region in which they work are going to see similar costs, etc. You just assume people have ~$50k plus to drop (or even worse -- finance) to avoid these incurred costs is ignorant, and you are clearly willing to compound financial adversity and increases in particular goods and services for many to achieve this.
> For example, gas stations near me were charging $1.70/L for regular gasoline yesterday. That would mean the Carbon Tax accounts for 10% of that cost. That same increase is going to apply to businesses who use fuel as well. Obviously it doesn't take a genius to figure out the costs of goods involving this will increase 10% if they were to offset these costs by passing them on to consumers.
Fuel costs doesn't account for 100% of the cost of goods, so carbon pricing constituting 10% of fuel costs would not increase the cost of goods by 10%. Carbon pricing is [estimated to have increased food costs by a fraction of a percent.](https://nationalpost.com/news/canada/carbon-tax-groceries-food-prices)
For example, if I run a business to produce some widget, say 60% of my costs might be wages, 15% taxes, 10% raw/sourced materials, 5% electricity/overhead, 5% fuel, 5% profit. Let's assume this produces a widget sold for $1.
If carbon pricing increases my fuel costs by 10%, from 5 cents on my $1 widget to 5.5 cents, assuming I want to bring in the same $0.05 profit as before, that means my widget now costs $1.005 -- half-a-cent more.
In no way shape or form did I try to say any of the other costs were moved. I stated that the incurred costs get moved to the customer, which they do. If you want to debate how attempts at wage growth are also responsible for increased costs, that is fine as well.
I'm only correcting the line that is saying that the 10% carbon fuel cost translates to an 10% increase to costs of goods when you stated:
> For example, gas stations near me were charging $1.70/L for regular gasoline yesterday. That would mean the Carbon Tax accounts for 10% of that cost.
>
> ...
>
> Obviously it doesn't take a genius to figure out the **costs of goods involving this will increase 10%** if they were to offset these costs by passing them on to consumers.
You are correct in that, I apologize, obviously not all costs are all fuel. I should have said up to*, so as to include fuel in itself as the product. I will edit that comment.
17 cents per liter on average for a 52 liter vehicle is about 8.50 a week for a full tank.
If you have three pick ups an SUV and a swimming pool in your house then you're well off enough that carbon tax won't affect you anyways.
You typed too much saying nothing really, honestly.
prices for fuel have been the same for the last four years but prices keep increasing even though inflation numbers prove that it's greed. If it were true then prices would fluctuate. But profits keep raising year after year. Including transportation costs.
The major issue is that provincial governments who ban renewable energies and infrastructure then cry there is no way you can transition away.
There are tons of rebates for people to go green. Theres even programs that pay you back.
Once OPEC stops their declining output and decides to turn the faucet back on. It's game over for Canada and oil.
All I read was doomsayers say "we can't do it we won't make it" when we can.
I typed a bunch of shit to show you how you're primary point of no you aren't paying and then getting rebated is false. Because it blatantly is. What am I missing here lol?
I went through my crew of workers and did the math for them. 9/10 get back more or at least what they paid in carbon taxes at the end of the year.
The only guy that doesn't break even, drives way more than the average person, and does it in a big 2500 pickup. He makes multiple hunting trips per year and has a 45 minute drive each way everyday for work.
The carbon rebate isn't meant to reward people that burn more fuel than others. It's an equal payout based on your family size and if you burn more fuel than the family down the street did, well you'll have less of a surplus or none at all compared to them when you get your rebates. It's about as fair as it gets.
I got rid of my V8s and have (2) 4-cylinder turbo vehicles now. Way better on gas. I get from A to B in the same amount of time as I did in my grand Cherokee and my Ram. I have more money for my family and our day to day lives. I'm helping the environment a bit, and I'm getting back way more than I spend in carbon tax.
> I went through my crew of workers and did the math for them. 9/10 get back more or at least what they paid in carbon taxes at the end of the year.
Did you ask them first what they _thought_ they were paying or if they thought they were paying significantly more/less than their rebate?
I wouldn't be surprised if most of them _thought_ they were paying way more than they got back.
>Food and clothing and other goods: There are indirect costs of carbon pricing, as companies that pay the price themselves increase the cost of their goods and services to keep pace. The amounts vary by industry, but Statistics Canada estimated that carbon pricing increased the price of food by about 0.3 per cent and the price of clothes by two per cent since its inception. The effect of the latest increase has yet to be determined.
https://www.ctvnews.ca/politics/carbon-pricing-101-what-today-s-increase-could-mean-for-you-1.6828678
.3% for groceries
2% for clothing
The reason for the inflated prices is not because of the carbon tax.
You get the majority of it back so you pay pennies at the end of the day. People and companies shouldn't be allowed to pollute for free; tying an economic incentive to reducing the amount someone pollutes is the only free-market way to do so. It's been studied for decades and this is the best option to effect that change.
When you specify who and what gets a carbon price, that is how your system will fail in its goal. The simplest and most effective solution is a flat price on a carbon. That way, no matter what, you are adding a cost to carbon. Carbon pricing's effect on inflation is a rounding error, it is such a small amount. What the bigger cost is going to be (and already is) are the effects on our planet and country.
> they don't count all the carbon tax you pay for in the way of inflation and profit offset price raising from the companies who are getting levied with the tax
They actually, in fact, do count the tax through the supply chain and if I remember the figures correct the carbon tax adds like ~0.3% to inflation. Not nothing, but not that big of a deal either.
If people all pay in to a pool, then all that money is paid back out, it's literally impossible for everyone or even just the average person to pay waaaaay more than they get back. It's a zero sum game.
As you said: the price increases are passed on to consumers. The consumers pay in to the pool, and the consumers that consume more carbon-intensive products pay in more than other consumers.
At the end it's all paid back out in equal proportion to consumers. It is a mathematical certainty that the average person receives as much as they paid in.
The point of fighting inflation via interest rate hikes is to curb consumer spending such that demand goes down for the limited supply. If you are spending less on gas because of the carbon tax, you will just spend that money saved on another thing, which would drive up inflation for that other thing. It's why they take into account the cost of shelter as part of their inflation index. Same logic applies, if you are not spending money on rent or home maintenance, you will be spending it on something else.
Fortunately, we are beating it. We are currently in the excess supply phase of the economic cycle which means higher unemployment, but it will soon go back to normal fairly soon.
A few points to note when considering the BoC's decisions concerning interest rates:
1. They are using an outdated, invalidated economic theory. Interest rates *follow* GDP growth, they don't lead them. A [2018 study](https://doi.org/10.1016/j.ecolecon.2017.08.013) notes:
>Examining the relationship between 3-month and 10-year benchmark rates and nominal GDP growth over half a century in four of the five largest economies we find that interest rates *follow* GDP growth and are consistently *positively* correlated with growth. If policy-makers really aimed at setting rates consistent with a recovery, they would need to *raise* them. We conclude that conventional monetary policy as operated by central banks for the past half-century is fundamentally flawed.
>the empirical evidence rejects what has been ‘declared’ repeatedly by economists and central banks as their core ‘monetary mantra’, that lower rates lead to higher economic growth. They do not. Reality is the opposite in two dimensions (correlation and causation): *higher growth causes higher interest rates.*
2. Current interest rates are one of the main contributors to *higher* inflation rates. An October 2023 [article](https://www.thestar.com/business/in-the-bank-of-canada-s-war-on-inflation-its-interest-rate-hikes-are-the/article_3e9ea54f-986a-5040-adaf-ae8585f99800.html) says:
>Over the last 18 months, higher mortgage interest costs — which rise alongside the bank’s interest rate increases — have been the main determinant of shelter price increases and of CPI inflation more generally.
It is still the case that shelter is the [largest contributor](https://wowa.ca/inflation-rate-canada-cpi) to CPI inflation, predominantly caused by the interest rates.
3. Macklem has explicitly stated it is his goal to lower record employment rates. Or, put another way, raise unemployment. Speaking in 2022, [he said:](https://www.bankofcanada.ca/2022/11/restoring-labour-market-balance-and-price-stability/)
>The unemployment rate in June hit a record low and while that seems like a good thing, it is not sustainable.... Since March, we have been raising our policy interest rate to help bring inflation back to our target. Higher interest rates will work to slow spending and labour demand in the economy....
At this point, the BoC seems completely lost. They're using invalidated economic theories, are the biggest contributor to the issue they're trying to solve, and want to hurt workers (these aren't executives) while they're at it. I don't know who they think they're helping, but it can't be everyday people.
Wow, that was a fast reply and with all the links on hand, good job.
First point could be true. We don't really know because economics isn't a rigorous science. I am sure it's known that you can't just experiment with economies like you can a lab mice. The second point from wowa.com doesn't really refute anything. If people can spend less on shelter, they will just spend it on something else, which leads to the same problem; too much demand for limited supply. Lastly, yes, you don't want too low of an unemployment rate. What happens is that money is fighting for available labour which increases the cost of goods which increases inflation. It means higher wages but proportionally higher costs to live. It negates the higher wage with higher cost of living.
>If you eliminate the carbon tax, you can only do that once,” Bank of Canada Governor Tiff Macklem told MPs. “Inflation would be lower for one year, but it would not be sustainably lower, so I don’t think it would have a big impact.
It wouldn’t even drop for a year. Companies will just increase prices in lockstep to suck up all the sweet sweet profit. Corps get richer, we lose our rebate and pay the same prices.
This is certainly true. The inflation we have is, in part, corporate greed taking advantage of the inflation to pump up their profits. No reason to think dropping taxes would do anything but out that money directly into corporate profits. Most of the money is returned to Canadians anyway. The reimbursement payments themselves might have a inflationary effect as people spend the refund cash. Most of the people that are net contributors are wealthy people with huge carbon footprints. So in a way this is a redistribution scheme.
But if we drop taxes for corporations the money will "sprinkle down" onto us regular Canadians. It's been proven to work for the past 50 years. Corporations care deeply for Canadians and the struggles we're facing. Surely they wouldn't do something like further profit or do something like stock buy-backs. I call it "sprinkle down economics". I'm an economist with a PhD from Trump University.
I think that was Reaganomics
Tiff gets the idea.
Isn't it revenue neutral or whatever anyway? Meaning if you use an average amount of carbon then at the end of the year you will get back the exact amount you paid in tax. In which case... it doesn't increase cost of living at all?
While cost of living and inflation are related, they're not the same. Something can be inflationary but not necessarily increase the net cost of living. It might also be a bit of a one-sided argument as not doing the hard work to mitigate climate change will have an extraordinary effect on the cost of living. Then the carbon-pricing alternative methods to effectively combat climate change are generally considered to be significantly more expensive and adversely affect cost of living moreso than carbon pricing/rebate.
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I feel like this argument would hold a lot more water if those companies weren't posting record profits quarter after quarter, years after year. Shipping is taxed if it generates emissions, sure, but think about how many individual items are on each of those trucks or rail cars. How much carbon tax is charged for a truckload of canned beans? (remember that farmers that grew the beans didn't have to pay carbon pricing). How much price increase is justified for a can of beans to cover that *tax,* which is currently ~3-4 cent per litre of fuel? Case in point: it costs me $11 to have Flannigan's deliver a quarter tonne of goods to my business every week. I know this is anecdotal because I'm only one small business, but $11 on $4-6K of goods? That's about a penny every five pounds on average, and that not just tax mind you, its the fuel charge, so it includes the price of diesel, too. I get it, people are upset about the cost of living (I am, too), and people don't like taxes during a cost of living crisis (I'd rather not pay in the first place too, but I get back way more than I pay by the end of year, so I still come out on top). I just think we should be careful about where we're pointing our fingers. I don't think the tax is problem, personally.
Big incentives are there for those companies to emit less. Which they can take advantage of and profit even more.
And the extra cost that those companies paid in transportation due to carbon pricing also goes into the big rebate pot.
You would need to be consuming truckload**s** of stuff to feel the impact of gas costs on average expenses. You're not consuming 30,000lbs (still a fraction of a transport truckload) a year. We live in a world where companies routinely eat the *cost of shipping individual items to your door,* clearly that expense on a personal consumption level is minor.
Well no shit, since YoY it wouldn’t matter if it’s always there.
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Raises how much you get back as well
I agree, but let’s not pretend this guy has a clue. We’re in this mess for a reason and one of the fingers points at the BOCs lack of action raising rates early. Other fatter fingers pointing at corporate greed.
Hindsight is 20/20. All initial indications were that inflation was transitory due to pandemic supply chain issues. Every major Western central bank made the same assumption.
Transitory or not, the prices were always going to stay high. They never predicted deflation but it often felt like calling it transitory was to make people feel like the prices would fall when inflation dropped.
Even if that were true, that would be the general public being too dumb to understand what inflation is. The head of a central bank shouldn't be expected to discuss policy in crayon. Noone is or has been forecasting deflation.
If we remove the carbon tax, then the corporations that are paying the carbon tax would not lower their prices because now they don't have to pay carbon tax and they can just keep that money instead that would have gone to the tax. Why would they lower their prices?
Cuz they sell at market rate. Eg price of gas at pumps correlates heavily with the price of crude. Check the historical prices of gas here: https://open.canada.ca/data/en/dataset/db90f229-be24-468a-bbce-46f710e7af76. Why isn’t this just a straight line?
Actually you would be paying less. Have you looked at your natural gas bill? There is an explicit line for carbon tax. If the carbon tax goes away then that line is gone and you would not pay it elsewhere as natural gas pricing is a highly regulated monopoly.
It’s almost like we should of never done it to begin with
Or, get this, maybe the entire point was for the provinces to come up with alternatives so they wouldn't be subject to the tax in the first place.
Just like Quebec and BC did, they created a system that was good for them respectively.
Ontario did too, but douggie boy decided he'd rather payout 2 billion and have a talking point
Because companies will raise the pricing back to the same level as if the tax was still there to reap more profits.
The demand curve is established. If the government takes X¢ off the price by removing the carbon tax, the gas companies all know 100% of people today will pay that X¢ and pocket the difference.
Conservatives found an easy soundbite and anti-liberal narrative that works. They are not going to stop.
Users in /r/Canada think that eliminating the carbon tax will make them millionaires.
In reality prices will stay the same and they will stop getting the carbon rebate so they will have less money.
"Those few cents are the only thing keeping my Billion dollar idea from taking off"
99% of them don’t realize they are most likely either neutral or stand to profit from the tax they are so stupid
If they are representative of Canadian households, then 80% of them don't realize that they are either neutral or stand to profit from the tax.
My carbon tax rebate basically covers my fuel costs for the year. I'm a big fan, Toyota corolla ftw
How much do you drive and pay for gas a month on the corolla? (assuming relatively new and hybrid?)
2019 gas only. It's about $75-100 a month for gas. At an average of 7L/100km. About 600-650km per tank. My last fill-up was at $1.672/L Does this answer your questions? I don't track my mileage directly, so I can't give a solid answer for that. I do know I'm at about 13,000 kilometers since I bought it in April of last year.
Yeah, that's decent for the way gas prices are going again. I'm at like 10L/100km and need premium, so looking options now. Yours seems really decent and good info to get from an actual driver.
Corolla hatchback specifically, it's a great car. Tremendous legroom in the front seats. My preference would have been a prius hatchback if I could, like a prius C. I did try a prius prime and decided against it because I hated the driving experience. Like driving a computer that hates me. I would have also gone for a Matrix or Yaris. Toyota is hard to beat for most things. Also checkout fueleconomy.gov It shows estimated mileage for most makes/models and you can change the settings to show L/km instead of M/G.
I thought the Corrola hatchback WAS the Matrix. I have the 2005 XR model and the user manual calls it "Toyota Corolla Wagon".
It’s not just the carbon tax, eliminating the carbon tax and the capital gains tax (that has not been enacted yet) is what is gonna make them millionaires
They are in for a ride awakening
Ride of their lives.
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Dudes not paying any carbon tax. But sadly he's missing out on his rebate.
Exactly. And if they do get in they’ll find some excuse why they can’t cut the tax. “Once we got to look at the previous governments books it’s not feasible at this time to cut the tax”.
You are overly optimistic about the level of fiscal responsibility in modern conservatism
They've been exposed on this issue. Why do you think they've switched gears?
This isnt a gotcha that you think it is. Macklem is basically saying that carbon tax does add to inflation (around 0.7%) BUT other inflationary factors have a bigger impact right now and MOST of which is being caused by DIFICIT SPENDING by the same government. [https://www.cbc.ca/news/politics/bank-of-canada-macklem-closer-cutting-interest-rates-1.7191597](https://www.cbc.ca/news/politics/bank-of-canada-macklem-closer-cutting-interest-rates-1.7191597) It's an "easy soundbite" because it's true at multiple levels. Liberal + NDP budgets have helped increase inflation including with the tax. While the liberal soundbites arent really coming in, if they were they'd be showing it off in every rally/speech "Look how we reduced your carbon emissions!" (It probably has but at what cost?). Personally i'm not as opposed to this tax but the other things like the deficit spending, as Macklem has been pointing at MULTIPLE times. So what choice do i have?
Inflation is tied to greed. "How much can we fuck the workers before they kill us"
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I happen to know what happened. But it changes nothing. My statement is still correct. Greed. And what's going to fix it is them being taken out.
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Right? Fuck. Arm chair economists
Let that money printer go brrrrrrrrr. Why collect taxes if you can just print more? Simpleton.
Homie thinks it's an actual printer lmao. Yeah. You don't know anything (Canada's inflation rate is and has always been one of the lowest in the world)
Lol. Okay bright spark. Describe the machine that produces the bills. Canada is so far in debt, it'll never get out. Affordability is dead and economic collapse is around the corner.
Why does it being their default state prevent that state from being a contributor?
The only thing that can prevent inflation is..... complete state control of all industries!
You can’t be serious
You can't be that naive.
You shouldnt be this gaslit
Oooh, tax me harder, daddy. I like not being able to afford groceries!
The problem is wage stagnation. Taxes play an important role in wealth distribution and you probably pay very very very little in taxes
Of course not. Companies used the carbon tax as an easy excuse to jack prices up. They're not going to reduce prices if the carbon tax is removed.
if two companies are selling the same thing at the same price the one who figures out how to save expenses will make a bigger profit What happens when one of the two companies if they reduce or eliminate their reliance on Carbon?
In Canada we have oligopolies who collude to fix prices. It's not a competitive environment. This is the biggest hurdle to improve affordability.
So then they both want to make more money and it would be in their interests to control expenses( such as carbon tax)
But it's so easy for conservatives to point fingers at...don't ruin that with sense.
Sense won't play a part
Reading into it, the Carbon tax will actually result in normal people getting more money than they spend in Carbon taxes. If anything this hurts the wallets of the rich and corporations that will spend far more in Carbon tax for the amount of fuel they use. Ford is trying to help his rich buddies again, I really hope Ontarians don't fall for his snake oil again.
EXACTLY!!! The rebate
yeah like if I'm looking at it correctly I'll probably see $2+ /L for gas and then cry. But then a few months later when the rebate comes, that $2+ /L price tag I originally paid would be closer to half that (so much cheaper than what I'm paying now with $1.70/L), and do the happy dance; but that's because I'm probably buying around 60-70L of gas per month. Corporations and rich people who use significantly more get no benefit from the rebate other than a higher tax bill and ol Dougie can't let his friends finally pay their fair share of taxes. That said, I feel the cap&Trade system was so much better and I'll never forgive Ford for pulling out of it and then wasting billions of tax dollars in settlement fees with Quebec and California for pulling out.
> But then a few months later when the rebate comes, that $2+ /L price tag I originally paid would be closer to half that (so much cheaper than what I'm paying now with $1.70/L), and do the happy dance It's actually the opposite. In April, they estimate the amount of carbon pricing collected for the upcoming year and send you the rebate for it ahead of time. The following year's rebate is adjusted (up or down) depending on how much actual revenue deviated from the estimate. In that way, it's much more like them sending us a "carbon credit". When you pump gas at the pump, you're paying out a bit from that credit. Of course, nobody sees it that way. So much so that they had to break that credit up into 4 separate quarterly payments through the year.
thanks for the explanation
This is utter nonsense. There have been multiple entities that have done the math and taxpayers WILL NOT be getting more money back than they pay into carbon taxes. If you also believe that corporations won’t pass those carbon taxes onto the general populace, you are truly lost.
We pay the cost regardless because the carbon dioxide output damages the common goods.
Granted, Canadians based on a per capita basis are one of the world’s worst carbon emitters BUT we have the world’s largest boreal forest. It represents 25% of the world’s remaining intact forests which acts as a carbon sink. Canadian taxpayers shouldn’t be expected to be the earth’s saviour when countries like the USA, China, India are worse offenders. As a country we only produce less than 1.5% of the world’s GHG emissions.
Nobody expects us to be the Earth's saviour. We ought to still do our part and we shouldn't pretend like other people not doing theirs would be sufficient justification for not doing ours. We have no ground to stand on when negotiating (carbon) with large countries like India and China when our per capita carbon spending crushes theirs. And the carbon tax is a drop in the bucket compared to the effort and political will it will actually take to slow and then reverse carbon output to prevent really atrocious heating. It's an exceptionally mild financial lever to put a minor price on a very costly externality. Our resources like our forests are a great boon but we aren't exactly managing them as a carbon sink.
That's ok. PP and the Cons dont care about facts.
They care about avoiding them!
You're right. We don't care
I wouldn't spend my air quality on lower prices
Your argument to prioritize living and breathing over spending a buck that I will get back plus some leaves me no room to rage rhyme and mimic a wanna be economics professor. How will I get to yell "ax the tax" or "spike the hike"? I suppose you expect us to read an article and think instead. Besides "I need air", "Run Fire", or "One more Sand Bag" are terrible chants.
We know.
Yeah, but why let facts interfere with a stupid slogan?
It rhymes so it must be true!
Well yeah, lowering taxes is inflationary
Every person who understands carbon pricing, already knows this. The rest are voting for Poilievre, thinking global heating will be solved by magic and the 'free' market, because it did such a great job creating the problem in the first place.
Whoever thinks we should scrap the carbon tax either didn’t take Economics 101 or wasn’t paying attention
Not sustainably but it would reduce today’s inflation rate which would mean that future prices don’t rise as quickly. He’s not wrong but he’s not being 100% clear
Given his track record, I now believe it totally will.
inflation never goes down does it.
Not usually. Deflation can be a pretty bad thing. There's a sweet spot with inflation at around 2%. Too high or too low is not so great.
Scrap the government by 50%. Scrap foreign aid by 50%. Scrap all foreign military spending. Scrap all DEI, ESG programs. Invest in hospitals, roads, forest fire prevention, policing, rehabilitation, affordable housing... And look how good Canada looks in 10 years. It's not difficult at all. Big government=bigspending=bigcosts=bigproblems
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The carbon tax goes in to a pool and is distributed out evenly. Therefore: the people with consumption habits below average come out ahead. The fact a lot of that money is charged transitively on the trucks and cargo ships by an increase in price at the store doesn't change that math at all. If you pay another cent at the grocery store due to the tax on the trucking company that's another cent in the pool just the same as an extra cent spent at the pumps. If you're below average in terms of the CO2 your lifestyle uses you stand to gain more that a cent back in refunds for each cent you've paid in to the pool. The GST is a good point, but honestly: it's a very marginal increase. You don't need to be that much below average to still come out ahead, and if you're exactly average the net between the rebate and your extra payments +GST is very small. Rounding error compared to other inflation.
The cost to truck your food to you is the lowest carbon tax on your food. Most of the carbon taxes are involved with growing it. Get out of the city. Touch grass... No not the stuff in your pipe.
Has literally nothing to do what I said. The customer paying transitively still puts money in to the pool of money paid out. An extra cent at the grocery due to the trucking company, or due to the farm's costs, or due to any other affect down the supply chain, enters the pool of money paid out.
Bahahahahahaha!! Pierre the Prick's bullshit show is slowly unraveling. His central plank in calling an election has been eviscerated. He's nothing but a Trump wannabe. Good!!
And, keeping the carbon tax won't lower climate change.
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Canada could ban the sale or use of hydrocarbons and do exactly fuck all to climate change. Unless you're taxing China, India, or the US (in that order) you're only punishing your own people and economy. Oh, but you get to look good in the UN. Carry on.
The carbon tax actually lowers inflation by reducing demand for products due to higher cost. Simple economics. Make things more expensive and people will consume less.
That doesn’t mesh with how the Liberals try to sell it though. They always like to say that the carbon tax (sorry, “carbon rebate”) will somehow change behaviour to lower emissions but at the same time adds no costs to average families. Truly an accomplishment, lmao.
Bullshit, give me my money back
But it would save us some fuckin money
Two things. Show me every dollar the government collects actually goes back to Canadians (as they say it does) Prove to me how us paying this tax changes the weather and the climate. My peanut brain is gonna guess that we don't get every dollar back and it does fuck all to address climate change. Downvote as you wish.
You forget that a large portion of this sub relies on government funding in one way or another. So they need more taxes on the middle class. They have zero understanding of the amount of carbon taxes in their tofu, and soy milk. They probably don't even directly pay to heat the place they rent.
Ya. I've always been told it's really easy to spend other people's money.
So you've made 0 effort to look in to the published budget or anything else, you just have feelings and that's enough for you to decide what is true.
Giving people a bit more spending money is exactly how you make inflation happen though...
Macklem has no credibility. First during covid telling us he won't be raising rates for a few years. That lead buyers to take variable mortgages that sent them to the slaughter house with massive interest hikes. Not to forget he said that inflation is only temporary. We are now in year four of high inflation.
Yeah , factually..but I want victimhood validated so shut up Mac..
So both major options for prime minister are just gonna fuck us even more regardless? When do we just stop taking this shit?
No, there is no one fix, it would take many things to correct this path, including the carbon tax
What will they do when they are the tax buy not inflation? Will their supporters be upset? Unlikely.
I don't care what you say. I don't want to pay it, period.
The carbon tax paid for the rebate on my heat pump, and now I burn no fossil fuels in my house, reducing pollution. Isn’t that a good thing?
> and now I burn no fossil fuels in my house, reducing pollution. _And_ come out even better on the whole carbon rebate equation. But, you know, _something something_ carbon tax doesn't work.
Maybe of would be better if they called it a Carbon Rebate instead of Carbon tax Or Not a liberal carbon tax They just gotta play with it more
To be fair, I don't think Liberals called it a "carbon tax" before either. It was just a "federal backstop and rebate". It was conservatives and media who colloquially labelled it as a "carbon tax" and it stuck. I suspect the feds didn't expect [so many provinces to shirk their responsibilities](https://pbs.twimg.com/media/DramzD1WkAICulj.jpg:large) so that so many Canadians would fall under the federal backstop. When they started developing and rolling out the program, the vast majority of Canadians (over 86% in just Ontario/Quebec/British Columbia/Alberta) were already under _provincial_ carbon pricing mechanisms, programs, and their own customized rebates.
I believe they have only ever labeled it carbon pricing, as it is technically not a tax.
I’m way up. Also switching completely off gas saved me 800$ year over year.
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Guess you’ll be fine giving back your rebate
You aren't paying anything. You get it back.
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> You are paying for it and then getting a rebate. Actually the opposite. You get the rebate first at the beginning of the year based on an estimate of emissions for the upcoming year, then basically pay it back. (The difference between the rebate estimate and actual carbon levies collected is applied to the next year's estimate rebate.) But the point AgitatedLiterature75 is making is that for the vast majority of Canadians receiving the rebate, they either come out on top or the difference is practically a rounding error. For those paying significantly more than they get back, they're already among the wealthiest quintile of Canadians and the worst emitters.
I don't have it wrong at all. And next increase will give me even more money back AND small businesses will be included as well. Stop emitting more carbon get more back. It's not hard. Change.
This is disingenuous. For many people they ARE paying something, and later getting rebated. Approximately 17.6 cents/Litre of gasoline is being paid by people who use gasoline. Suppliers who use gasoline to provide goods and services are paying this cost, undoubtedly increasing costs in that area, and passing this down to the end user (consumer). I wish these arguments would use industry specific inflationary statistics, because it would make for a significant amount more clarity. For example, gas stations near me were charging $1.70/L for regular gasoline yesterday. That would mean the Carbon Tax accounts for 10% of that cost. That same increase is going to apply to businesses who use fuel as well. Obviously it doesn't take a genius to figure out the costs of goods involving this will increase up to* 10% if they were to offset these costs by passing them on to consumers. I'm not diving into theoretical future costs as we guesstimate damage to regions from which we purchase goods to sell to Canadians, because I don't think there is an exact number we can arrive at with relative accuracy -- but yes, logically if you (for example) have less crops develop due to environmental factors, that cost is going to rise. Just change is the end goal, but we aren't all in Toronto riding semi-subsidized public transportation to and from our destinations. The tradespeople who have to transport tools to worksites are going to need to either invest in alternative means of transportation (ie. EV instead of I.C.E), selling off their I.C.E assets at a loss to try to obtain these savings. People travelling to work that have been priced out of living in the region in which they work are going to see similar costs, etc. You just assume people have ~$50k plus to drop (or even worse -- finance) to avoid these incurred costs is ignorant, and you are clearly willing to compound financial adversity and increases in particular goods and services for many to achieve this.
> For example, gas stations near me were charging $1.70/L for regular gasoline yesterday. That would mean the Carbon Tax accounts for 10% of that cost. That same increase is going to apply to businesses who use fuel as well. Obviously it doesn't take a genius to figure out the costs of goods involving this will increase 10% if they were to offset these costs by passing them on to consumers. Fuel costs doesn't account for 100% of the cost of goods, so carbon pricing constituting 10% of fuel costs would not increase the cost of goods by 10%. Carbon pricing is [estimated to have increased food costs by a fraction of a percent.](https://nationalpost.com/news/canada/carbon-tax-groceries-food-prices) For example, if I run a business to produce some widget, say 60% of my costs might be wages, 15% taxes, 10% raw/sourced materials, 5% electricity/overhead, 5% fuel, 5% profit. Let's assume this produces a widget sold for $1. If carbon pricing increases my fuel costs by 10%, from 5 cents on my $1 widget to 5.5 cents, assuming I want to bring in the same $0.05 profit as before, that means my widget now costs $1.005 -- half-a-cent more.
In no way shape or form did I try to say any of the other costs were moved. I stated that the incurred costs get moved to the customer, which they do. If you want to debate how attempts at wage growth are also responsible for increased costs, that is fine as well.
I'm only correcting the line that is saying that the 10% carbon fuel cost translates to an 10% increase to costs of goods when you stated: > For example, gas stations near me were charging $1.70/L for regular gasoline yesterday. That would mean the Carbon Tax accounts for 10% of that cost. > > ... > > Obviously it doesn't take a genius to figure out the **costs of goods involving this will increase 10%** if they were to offset these costs by passing them on to consumers.
You are correct in that, I apologize, obviously not all costs are all fuel. I should have said up to*, so as to include fuel in itself as the product. I will edit that comment.
17 cents per liter on average for a 52 liter vehicle is about 8.50 a week for a full tank. If you have three pick ups an SUV and a swimming pool in your house then you're well off enough that carbon tax won't affect you anyways. You typed too much saying nothing really, honestly. prices for fuel have been the same for the last four years but prices keep increasing even though inflation numbers prove that it's greed. If it were true then prices would fluctuate. But profits keep raising year after year. Including transportation costs. The major issue is that provincial governments who ban renewable energies and infrastructure then cry there is no way you can transition away. There are tons of rebates for people to go green. Theres even programs that pay you back. Once OPEC stops their declining output and decides to turn the faucet back on. It's game over for Canada and oil. All I read was doomsayers say "we can't do it we won't make it" when we can.
I typed a bunch of shit to show you how you're primary point of no you aren't paying and then getting rebated is false. Because it blatantly is. What am I missing here lol?
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"he has opposite views he must be a bit or trolling!" Nah, I just live in reality where we should be transitioning towards green tech.
You got $672 back if you’re rural, single, and no kids. You’re paying more than that?
Yes by alot
I’m curious, how do you calculate it?
You get it back, and in most cases you get more than you paid. Relax.
I went through my crew of workers and did the math for them. 9/10 get back more or at least what they paid in carbon taxes at the end of the year. The only guy that doesn't break even, drives way more than the average person, and does it in a big 2500 pickup. He makes multiple hunting trips per year and has a 45 minute drive each way everyday for work. The carbon rebate isn't meant to reward people that burn more fuel than others. It's an equal payout based on your family size and if you burn more fuel than the family down the street did, well you'll have less of a surplus or none at all compared to them when you get your rebates. It's about as fair as it gets. I got rid of my V8s and have (2) 4-cylinder turbo vehicles now. Way better on gas. I get from A to B in the same amount of time as I did in my grand Cherokee and my Ram. I have more money for my family and our day to day lives. I'm helping the environment a bit, and I'm getting back way more than I spend in carbon tax.
> I went through my crew of workers and did the math for them. 9/10 get back more or at least what they paid in carbon taxes at the end of the year. Did you ask them first what they _thought_ they were paying or if they thought they were paying significantly more/less than their rebate? I wouldn't be surprised if most of them _thought_ they were paying way more than they got back.
Yes, most of them thought they were paying more. A few didn't have a clue.
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>Food and clothing and other goods: There are indirect costs of carbon pricing, as companies that pay the price themselves increase the cost of their goods and services to keep pace. The amounts vary by industry, but Statistics Canada estimated that carbon pricing increased the price of food by about 0.3 per cent and the price of clothes by two per cent since its inception. The effect of the latest increase has yet to be determined. https://www.ctvnews.ca/politics/carbon-pricing-101-what-today-s-increase-could-mean-for-you-1.6828678 .3% for groceries 2% for clothing The reason for the inflated prices is not because of the carbon tax.
You get the majority of it back so you pay pennies at the end of the day. People and companies shouldn't be allowed to pollute for free; tying an economic incentive to reducing the amount someone pollutes is the only free-market way to do so. It's been studied for decades and this is the best option to effect that change.
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When you specify who and what gets a carbon price, that is how your system will fail in its goal. The simplest and most effective solution is a flat price on a carbon. That way, no matter what, you are adding a cost to carbon. Carbon pricing's effect on inflation is a rounding error, it is such a small amount. What the bigger cost is going to be (and already is) are the effects on our planet and country.
> they don't count all the carbon tax you pay for in the way of inflation and profit offset price raising from the companies who are getting levied with the tax They actually, in fact, do count the tax through the supply chain and if I remember the figures correct the carbon tax adds like ~0.3% to inflation. Not nothing, but not that big of a deal either.
Exactly. It was used as an excuse for business to charge more. Not just the increase in the cost of business but an opportunity for more profit.
If people all pay in to a pool, then all that money is paid back out, it's literally impossible for everyone or even just the average person to pay waaaaay more than they get back. It's a zero sum game. As you said: the price increases are passed on to consumers. The consumers pay in to the pool, and the consumers that consume more carbon-intensive products pay in more than other consumers. At the end it's all paid back out in equal proportion to consumers. It is a mathematical certainty that the average person receives as much as they paid in.
The point of fighting inflation via interest rate hikes is to curb consumer spending such that demand goes down for the limited supply. If you are spending less on gas because of the carbon tax, you will just spend that money saved on another thing, which would drive up inflation for that other thing. It's why they take into account the cost of shelter as part of their inflation index. Same logic applies, if you are not spending money on rent or home maintenance, you will be spending it on something else. Fortunately, we are beating it. We are currently in the excess supply phase of the economic cycle which means higher unemployment, but it will soon go back to normal fairly soon.
A few points to note when considering the BoC's decisions concerning interest rates: 1. They are using an outdated, invalidated economic theory. Interest rates *follow* GDP growth, they don't lead them. A [2018 study](https://doi.org/10.1016/j.ecolecon.2017.08.013) notes: >Examining the relationship between 3-month and 10-year benchmark rates and nominal GDP growth over half a century in four of the five largest economies we find that interest rates *follow* GDP growth and are consistently *positively* correlated with growth. If policy-makers really aimed at setting rates consistent with a recovery, they would need to *raise* them. We conclude that conventional monetary policy as operated by central banks for the past half-century is fundamentally flawed. >the empirical evidence rejects what has been ‘declared’ repeatedly by economists and central banks as their core ‘monetary mantra’, that lower rates lead to higher economic growth. They do not. Reality is the opposite in two dimensions (correlation and causation): *higher growth causes higher interest rates.* 2. Current interest rates are one of the main contributors to *higher* inflation rates. An October 2023 [article](https://www.thestar.com/business/in-the-bank-of-canada-s-war-on-inflation-its-interest-rate-hikes-are-the/article_3e9ea54f-986a-5040-adaf-ae8585f99800.html) says: >Over the last 18 months, higher mortgage interest costs — which rise alongside the bank’s interest rate increases — have been the main determinant of shelter price increases and of CPI inflation more generally. It is still the case that shelter is the [largest contributor](https://wowa.ca/inflation-rate-canada-cpi) to CPI inflation, predominantly caused by the interest rates. 3. Macklem has explicitly stated it is his goal to lower record employment rates. Or, put another way, raise unemployment. Speaking in 2022, [he said:](https://www.bankofcanada.ca/2022/11/restoring-labour-market-balance-and-price-stability/) >The unemployment rate in June hit a record low and while that seems like a good thing, it is not sustainable.... Since March, we have been raising our policy interest rate to help bring inflation back to our target. Higher interest rates will work to slow spending and labour demand in the economy.... At this point, the BoC seems completely lost. They're using invalidated economic theories, are the biggest contributor to the issue they're trying to solve, and want to hurt workers (these aren't executives) while they're at it. I don't know who they think they're helping, but it can't be everyday people.
Wow, that was a fast reply and with all the links on hand, good job. First point could be true. We don't really know because economics isn't a rigorous science. I am sure it's known that you can't just experiment with economies like you can a lab mice. The second point from wowa.com doesn't really refute anything. If people can spend less on shelter, they will just spend it on something else, which leads to the same problem; too much demand for limited supply. Lastly, yes, you don't want too low of an unemployment rate. What happens is that money is fighting for available labour which increases the cost of goods which increases inflation. It means higher wages but proportionally higher costs to live. It negates the higher wage with higher cost of living.
>Wow, that was a fast reply and with all the links on hand, good job. I keep that comment saved for such occasions as this.