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Comment by peder | Hacker News Reader

Unless govts become addicted to carbon tax revenue, in which case they may allow the same level of carbon emissions anyway.

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Canada's "carbon pricing" (the government tries to avoid the word "tax" due to its negative connotations) is designed to be almost revenue-neutral to avoid this exact problem. 90% of the money is rebated directly to the people. The other 10% is used to fund green projects.

https://www.theglobeandmail.com/investing/personal-finance/t...

>Those payments mean that around 80 per cent of households receive a payment that more than covers annual carbon costs; the other 20 per cent are higher-income households that have bigger carbon bills, and so end up being out of pocket.

This claim in the article is directly contradicted by the Canadian government.

>Indeed, most households will see a net loss resulting from federal carbon pricing under the HEHE plan in 2030-31 (Table 3-2). That is, their overall costs—which now include the federal levy and GST paid (fiscal impact) and lower employment and investment income (economic impact)—exceed the rebate and the induced reduction in personal income taxes arising from the loss in income.

https://www.pbo-dpb.gc.ca/en/blog/news/RP-2122-032-S--distri...

No, the two claims are not at all inconsistent. Households are seeing more money than they would otherwise, which was the point of the comment you're replying to. See page 10 of your link:

>Taking into account only the fiscal, or “use-side” impacts, we project most households will see a net gain, receiving more in rebates from federal carbon pricing under the Government’s HEHE than the total amount they pay in federal fuel charges (directly and indirectly).

The quote you're pulling specifically factors in a projected "economic impact" of lost investment, which it compares to the "fiscal impact". The economic impact is precisely the point. The fiscal impact is how to make the medicine go down.

It would be great news if we can sacrifice some economic growth in the short term in order to create a potentially popular wealth transfer program that also efficiently disincentivizes burning fossil fuels. If this approach can be scaled up, then the economic losses incurred will be outweighed several times over by averting climate change catastrophe. That's the whole idea.

I guess I shouldn't be surprised that the politicians and the media never mention the economic impact cost of this plan, and only tout the rebate.

>It would be great news if we can sacrifice some economic growth

The bank of Canada is projecting "significant macroeconomic consequences, touching every region and sector" and "asset values across the financial system could be subject to sharp declines in valuation, which might generate credit and market losses, and it might increase the stress on the financial system".

https://www.reuters.com/business/cop/bank-canada-plans-new-t...

The Bank of Canada also seems to recognize the economic costs of doing nothing. Full context of both your quotes:

>"Climate change and the transition to a low-carbon net zero economy will have significant macroeconomic consequences, touching every region and sector of the Canadian and global economies," the bank said in a statement tied to the United Nations' COP26 global climate summit in Scotland.

And:

>Separately, Bank of Canada Deputy Governor Toni Gravelle said the steps needed to mitigate the effects of global warming would lead to massive restructuring and the risk that some parts of the economy would shrink.

>"Asset values across the financial system could be subject to sharp declines in valuation, which might generate credit and market losses, and it might increase the stress on the financial system," he told a climate panel in Toronto.

>The Bank of Canada also seems to recognize the economic costs of doing nothing

Nothing in that quote mentioned anything about the cost of doing nothing.

Yes, they do. From both quotes (emphasis mine):

>"_Climate change and_ the transition to a low-carbon net zero economy will have significant macroeconomic consequences ... "

>Separately, Bank of Canada Deputy Governor Toni Gravelle said the steps _needed to mitigate the effects of global warming_ ...

I think the former is more likely to be true.

If 100% of the money went back, you'd get back equal (or more) what you paid, if you are responsible for the average (or less of the same) of CO2 production per citizen.

Since there are many more poor people than there are rich people which are responsible for disproportional much more emission, the people below the average are the majority

Source: https://www.theguardian.com/environment/2022/feb/04/carbon-f...

Only paying back 90% generates a small shift into the other direction though

Most Canadian households do get back more than what they paid.

The way that there are net losses to households is by calculating the "economic costs" of lost investment and jobs. This is exactly what carbon taxes are meant to do: internalize the externalized costs of burning fossil fuels.

When I think of lost jobs I think of lost busy work. Surely, if you are complaining about the lack of busywork, climate change mitigation will give you a lot of busy work, just not much profit.

Where's that money going? Administering the program? Being taken by the government as tax revenue?

From a pure fiscal standpoint, there is still a net gain to most households.

The net loss here is calculated by subtracting the "economic cost" of lost investment and jobs due to carbon pricing. This is kind of the point; you would probably expect industries that are more fossil fuel intensive to be taking a hit if carbon taxes are doing what we want them to do.

The more you tax something, the less of it you get. Imposing a non-zero cost on carbon will always be strictly better at reducing carbon emissions than imposing a zero cost on it. How effective it is depends on how big a tax it is, of course, but usually governments addicted to a tax tend to increase said tax, which in this case makes it better, since it will disincentivize emissions even more.

Curious, can you link to any reading on this subject? The canonical high-tax situation I think of is income tax in NYS and CA, and it seems that has only pushed prices and incomes UP, rather than down. But maybe it works differently for income tax because physical work locations are not truly competitive across location and most folks have visas, schools, family, friends, etc. pinning them to a location and reducing flexibility.

What is the basis for the claim that income tax in NYS and CA pushed prices and income up? This seems extremely unlikely, unless you are looking at pretax income or something.

avoid the addiction by turning it directly into a citizen’s dividend

This is what Canada is doing. Equal rebates for everyone - use less and you get a subsidy, use more and you're the one doing the subsidizing.

Now of course Canada's carbon tax is tiny, but there's probably some behavioural economics rationale behind the idea that even a tiny cost can have outsized impact on behaviour.

Rebates for people in certain provinces. Others have implemented a cap-and-trade shell game where the residents receive nothing but they still experience rising prices because of costs to nation-wide businesses being passed on either way.

Shamefully, I've committed the cardinal sin of people from my province: forgetting the other 60% of my countrymen and forgetting that things do vary between provinces.

At this stage I'm starting to think that we'll need either:

- a drastic societal change or, - stumble upon an ancient alien artefact progressing our technology to the point where coal becomes useless

(digging a giant hole in my backyard with the hope of finding a Stargate whilst writing this comment)

Edit: morbid humour and sarcasm aside, the sibling comments provide some context on why taxing carbon might actually work

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