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A new study by the C. D. Howe Institute finds that the plan to have the tax kick in at different emissions levels for different types of fuel — with higher tax-free allocations for coal-fired plants than natural gas, and none at all for hydro and wind — would discourage the very thing it is supposed to encourage: the transition from high-emitting to low-emitting forms of electricity generation.

Still, the overall cost of carbon pricing is trivial, in the scheme of things, as the Parliamentary Budget Office has lately confirmed. It puts the overall revenue haul from the federal carbon levy, in the four provinces in which it now applies, at $2.6 billion this year, rising to $6.2 billion in 2022-23, when the tax is scheduled to hit $50 a tonne. That’s a little over one-tenth of one per cent of GDP, rising to one-quarter of one per cent.

A tax of one-quarter of one per cent of GDP, phased in over four years, is not going to kill the economy; neither would a tax of twice that amount, which is about how much revenue it would yield if applied nationwide. But of course almost all of the revenues Ottawa collects are to be rebated back to consumers via their income-tax returns. Again, the PBO confirms government estimates that most households will receive more in rebates than they pay in tax. Meaning the impact on the economy is likely to be virtually nil.

It is pure political grandstanding, on both sides

You would never know any of this from the rhetoric of Conservatives, federal and provincial. Either they simply ignore the rebate — “it’s a tax grab” — or they denounce it as “a redistribution scheme,” or they pretend not to understand how the combination of tax and rebate (“taking money and giving it back”) could possibly alter consumer behaviour. (Answer: the same way prices do generally. Even if you collect more from the rebate than you pay in tax, it still pays to cut back on your carbon consumption — you get to keep more of the rebate if you do.)