Tuesday, June 12, 2007

Carbon Tax in Quebec: Go Pigou!

As I have said over and over again , I am supportive of putting a tax on fossil fuel consumption to reflect the cost (the public cost) of consuming fossil fuels. I think we need to raise the price of gas, and funnel the funds into public transit, research, and playing around with incentive structures (that would be fun!). Well, Greg Mankiw's Pigou Club got a reason to celebrate (a least a little) last week when Quebec added a tax on gasoline and electricity! Mankiw was impressed ( see here ). As nicely reported on Bloomberg : " Refiners including Valero Energy Corp.'s Ultramar unit and Royal Dutch Shell Plc's Canadian unit will start paying a tax of 0.8 cent a liter on gasoline and 0.9 cent on diesel on Oct. 1. Power producers such as state-owned Hydro- Quebec and gas companies will also be taxed. " (should that say province-owned?) Although this is not a large tax by any means, it is a start that will generate $200 million a year for measures to reduce greenhouse gas emissions.

Although, to be honest, I do not think that 0.8 cents a liter will do very much in the way of reducing consumption, this is the first of its kind in Canada and I hope that Quebec voters are supportive of the idea. As for me, I hope to walk to work tomorrow (if the rain ever stops ... O'Halifax).

1 comment:

Matthew said...

Will the money from the fuel tax be actually spent on research and lowering CO2 emissions or will it just be another barrier to business in Quebec? While I admire the socialist policies of various Quebec provincial governments I don't think they helped the province create new business and improve the economy especially in the more rural (and more separatist) parts of the province.