Why the public might buy into a carbon tax

Elections are rarely fought over big issues; even more rarely are they won that way. Though the public dutifully tell the pollsters that this or that big issue, as defined by the media, is important to them, they are usually lying -- telling the pollster what they think they should say -- and even where they are not, will as often as not decide their vote on some other basis.... 

Big issues, after all, have typically been around for a while. That’s how they get to be big. But the reason they’re still around is that no one’s figured out how to solve whatever problem it was that made them an issue in the first place. And the longer they remain unsolved, the more skeptical the public becomes of any proffered remedy, certainly of the kind -- easy, painless, cost-free -- that political parties tend to suggest. If there were an easy answer, the voters reason, someone would have implemented it already.

The other thing about big issues is that everyone knows they’re big issues, well in advance of voting day. So the parties have plenty of time to come up with a position that minimizes any risk of running afoul with the voters. And since the voters are generally skeptical of change (see above), that means hugging as close to the status quo, and each other, as they can manage. 

There are exceptions to this rule, however, when the parties retreat to opposite corners on a big, important issue and come out fighting. The free trade election of 1988 is the classic example. This is what makes the Liberals’ apparent willingness to endorse a carbon tax so intriguing. The most radical shift in tax policy in a generation, it holds the potential, as few issues do, to be not just a big issue, but a decisive one. 

Even the Tories could not be so flexible, surely, as to suddenly embrace what they have so fervently denounced until now. And even the Liberals could not be so craven, surely, as to back away from a policy to which all of their rhetoric points, and which is so critical to their credibility as environental advocates. The greater likelihood is that both parties will see it in their strategic interests to double down on the proposal: the Tories, because they think they can paint it as a tax grab, the Liberals, because they have to do something to get the focus off their leader. The result: this could be the most policy-driven election since 1988.

That’s if the press can be induced to get off their duffs and examine it as policy, rather than indulging in the usual idle speculation on how it will play politically. So far, most of the commentary has been confined to guffawing at Stéphane Dion for his naivety in suggesting it. “Mr. Dion’s idea,” the National Post declared authoritatively, “will be suicidal at the polls.” This is why Dion will never be prime minister, the paper’s comment editor, Jonathan Kay, agreed, while the Globe and Mail’s Margaret Wente saw it as evidence of his “unerring instinct for his own jugular.” To be fair, that’s what many anonymous Liberals are saying, taking advantage of the witness protection program the Globe appears to be operating on its front page.

Leave aside evidence that the policy in fact enjoys considerable popular support -- 61% in a recent poll -- or the apparent political success the British Columbia government has enjoyed with a similar plan. You’d never know it from the above commentary, but the Liberal proposal involves, not just a broadening of the current 10 cents a litre fuel tax to embrace other sources of carbon emissions, but offsetting -- and potentially spectacular -- cuts in income taxes. Either would be good policy on its own, but together they make not only good policy, but I venture to say, good politics. The same cynics would have said free trade was political suicide -- many did. But it just may be that the public are not such dolts as made out, and that treated like adults, they may respond in kind.

Certainly the idea can be defended on its merits. If you attach any significance at all to the global warming thesis, then the best and cheapest way to reduce greenhouse gas emissions is to put a price on them -- whether by means of the cap-and-trade system already in the works for large emitters, or the carbon tax the Grits would apply to the 50% or so of emissions that remain. Exhortation has no effect. Regulation is too costly. Subsidies are if anything counter-productive. The only way you really bring about long-term changes in behaviour is by embedding the cost of environmental damage into the prices of things. That’s what prices do every day, in a market economy: send signals about costs, allowing consumers to make informed choices.

Is it so hard to imagine that the public could be persuaded of the wisdom of a relatively simple idea: that we should tax less the things we want more of -- work, savings, investment  -- and tax more the things we want less of, like greenhouse gases? Granted, we have yet to hear the specifics of the Liberal plan, and I’m readying myself to be disappointed: instead of using the revenues from a carbon tax to slash the top marginal rate of income tax, which is where most investment decisions are made, they may choose to blow it all on raising the personal tax exemption and other populist fare. But in the broad strokes, the policy has much to recommend it, and given sufficient time to examine it, the public may well come to agree.