IMF: Hike energy taxes, cut income taxes to boost Canada's Economy


mentalfloss
#1
IMF says hiking energy taxes and cutting income taxes could give Canada’s economy just the boost it needs

OTTAWA — The International Monetary Fund says Canada and other countries can improve their economies and environment by hiking energy taxes — while cutting them on people and capital.

In a new book, Getting Energy Prices Right: From Principle to Practice, the IMF essentially endorses policies at times advocated by the federal Liberals and NDP calling for what some have termed a “green shift” in the taxation system. The Conservative government, however, has rejected carbon taxes.

The premise of the book is that while carbon-based energy was indispensable to economic growth over the past century, it has come with considerable costs.

The results confirm that many countries are only at base camp with regard to getting energy prices right
The solution, the IMF says, is to tax energy to such a level that the revenue pays for energy’s environment and health costs.

In a novel and rather ambitious approach, the Washington-based financial institution attempts to calculate the cost of carbon energy — coal, gas, motor diesel and natural gas — for 156 countries and proposes precise taxation levels for each country to implement.

“The results confirm that many countries — advanced, emerging, and developing — are only at base camp with regard to getting energy prices right,” IMF managing director Christine Lagarde says in a foreword to the 199-page book.

For Canada, getting the price right could be a shock to the system of consumers and industry.

For instance, the IMF says gasoline should be taxed at about $US0.55 a litre instead of the current 36 cents, and road diesel at about US$0.64 per litre, instead of the current 42 cents.



The book uses U.S. currency calculations so exact numbers in Canadian dollars are not precise, but they roughly translate to a 52% increase in the taxes applied to both gasoline and diesel.

Meanwhile, the IMF says there should be a US$4.90 (about C$5.34) per gigajoule tax on coal, where there is none now, and natural gas should be taxed at $2.20 (C$2.39) per gigajoule, in place of the small subsidy that currently exists. A gigajoule is a unit of energy.

In an interview, co-author Ian Parry agreed such proposals have caused a voter backlash whenever suggested, but adds that the trick is to make clear to voters that other taxes, particularly those on income, will be cut by identical amounts.

We are talking about a smarter more efficient way to use taxation to meet a country’s fiscal objectives
“We are not talking about increasing the overall tax burden; we are talking about a smarter more efficient way to use taxation to meet a country’s fiscal objectives,” he said.

Parry admitted, however, that governments haven’t been very successful at communicating the “revenue neutral” message and that voters have been skeptical. One way of trying to convince people they are not being gouged is for governments to cut income taxes before introducing the added carbon charges.

As well, he said, carbon taxes should be phased in slowly to lessen shocks to the economy.

The IMF calculates phasing in the carbon taxes to the levels it suggests would increase Canada’s gross domestic product by 1.4%, reduce carbon emissions by 15% and diminish deaths from air pollution by 25%, the latter mostly from reducing coal use.

It cautions that the numbers are estimates only, based on assumptions that can be debated, but that the overall message is valid.

“Underpinning the policy recommendations is the notion that taxation can influence behaviour. In much the same way that taxes on cigarettes discourage their overuse, appropriate taxes can discourage overuse of environmentally harmful energy products,” the authors write.

On costs, the authors attempt to tally up the impacts of carbon not only on climate change, but also for more common air pollution that affects health, as well as traffic congestion and accidents.

Globally, Canada is near the bottom on the scale of taxation levels for gasoline among industrialized nations. It taxes gas higher than the U.S., but generally well below taxation levels applied in Europe and Japan.

IMF says hiking energy taxes and cutting income taxes could give Canada’s economy just the boost it needs | Financial Post (external - login to view))
 
Grievous
No Party Affiliation
+1
#2  Top Rated Post
I like the idea of a carbon tax with lower taxes on individuals and business.


Use the free market to explore alternatives to dirty energy. If not for AGW then at the very least for pollution which kills thousands every year.
 
Retired_Can_Soldier
#3
This sort of thing never balances out. Carbon taxes result in higher shipping costs, resulting in inflation which usually doesn't translate in higher wages. At the end of the day this is just a shell game with your money and the game is always fixed so that the house wins.
 
Grievous
No Party Affiliation
#4
Quote: Originally Posted by Retired_Can_SoldierView Post

This sort of thing never balances out. Carbon taxes result in higher shipping costs, resulting in inflation which usually doesn't translate in higher wages. At the end of the day this is just a shell game with your money and the game is always fixed so that the house wins.



Lower tax on income and business would equal that out and create incentive for the free market to move away from dirty energy.


If it never balances out show me where it has been tried before to prove your claim.
 
captain morgan
Bloc Québécois
#5
Quote: Originally Posted by mentalflossView Post

IMF says hiking energy taxes and cutting income taxes could give Canada’s economy just the boost it needs

I got a better idea.

We cut income taxes and increase the taxes on energy exports. Once we get that done, we save even more money by stopping any payments to the UN, cut foreign aid and eliminate the tax exemption status for Greenpeace, Tides and Forest Ethics.

Oh - a special tax on Neil Young concerts will be of huge benefit
 
MHz
#6
Colpy says he likes to play with numbers. When this is all said and done, 'How much did Canada just give Russia as the payment that the Ukraine owes for NG used or in their possession. There seems to be a bit of a snag with the testimony of the witnesses in that settlement against Russia when it came to value of a company when annexed. The illegal profits before can be kept but that level cannot be claimed in the years it took to bring this to a conclusion before the courts. Pretty much a $100B deal to the IMF and time to call in some 'favors'. Risopoly is such a twisted game. The medical equivalent is Monisk

Quote: Originally Posted by captain morganView Post

I got a better idea.

Oh - a special tax on Neil Young concerts will be of huge benefit

Cut the whole legal system, make this the standard punishment for all crimes and bad deeds
 
Grievous
No Party Affiliation
#7
Quote: Originally Posted by captain morganView Post

I got a better idea.

We cut income taxes and increase the taxes on energy exports. Once we get that done, we save even more money by stopping any payments to the UN, cut foreign aid and eliminate the tax exemption status for Greenpeace, Tides and Forest Ethics.

Oh - a special tax on Neil Young concerts will be of huge benefit



Please.


Your talking about your own political peanuts compared to the bigger picture.


Tell me, does this include removing tax exemptions for the Fraser Institute or any other right wing think tank?
 
mentalfloss
#8
Quote: Originally Posted by captain morganView Post

I got a better idea.

We cut income taxes and increase the taxes on energy exports. Once we get that done, we save even more money by stopping any payments to the UN, cut foreign aid and eliminate the tax exemption status for Greenpeace, Tides and Forest Ethics.

Oh - a special tax on Neil Young concerts will be of huge benefit

I've got a better idea.

Let's just take all your money and cut taxes for everyone else.



Except Walter.




And Durry.

Quote: Originally Posted by GrievousView Post

Please.


Your talking about your own political peanuts compared to the bigger picture.


Tell me, does this include removing tax exemptions for the Fraser Institute or any other right wing think tank?

Or subsidies for oil companies - like the one he works for?
 
MHz
#9
Quote: Originally Posted by mentalflossView Post

I've got a better idea.

Let's just take all your money and cut taxes for everyone else.



Except Walter.




And Durry.

How about those two take on the whole tax burden by themselves, they already know how the country should be run. Start off with a few tankers of red paint and the rest of the plan will fall into place.
 
Grievous
No Party Affiliation
#10
Quote: Originally Posted by mentalflossView Post

I've got a better idea.

Let's just take all your money and cut taxes for everyone else.



Except Walter.




And Durry.



Or subsidies for oil companies - like the one he works for?



Oil companies should not get any subsidies.....at all......ever.
 
captain morgan
Bloc Québécois
#11
Quote: Originally Posted by GrievousView Post

Please.


Your talking about your own political peanuts compared to the bigger picture.


Tell me, does this include removing tax exemptions for the Fraser Institute or any other right wing think tank?

Sure, include the Fraser Institute. Fact is, the private sector will support those orgs that have value to them.... The lefties don't donate anything (they are the takers of the world) on the other hand, have no value, ergo - the leftie orgs like Pembina Institute, greenpeace, Tides, etc will founder and wither on the vine.

... So, count me in

Quote: Originally Posted by mentalflossView Post

I've got a better idea.

Let's just take all your money and cut taxes for everyone else.



Except Walter.




And Durry.



Or subsidies for oil companies - like the one he works for?

Works for me... My cash is in a few LTDS.

I especially support the elimination of subsidies for oil companies.
 

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