Federal Environment Minister Steven Guilbeault is right: the carbon tax on retail sales to consumers could be replaced. In fact, the federal carbon tax should not have been introduced in 2018. By then, the evidence from British Columbia demonstrated that simplistic economic thinking had failed.
B.C. was the first province to introduce a carbon tax on gasoline, in 2008.
Statistics Canada reports the annual sales of gasoline by province. Sales of gasoline in B.C.
have traced a course that hit a peak in 2017, 10 per cent higher than in 2008. The only event that caused a decline in sales was the arrival of the COVID pandemic. But in 2021, sales went back up, almost to the level in 2019.
Parliament depends heavily on elementary economic thinking. It does not understand that such thinking does not always work. With retail gasoline there are two factors.
The arrangement from the get-go was to refund to taxpayers the approximate cost of the tax at the pump and the gas meter. Why would a rational citizen pay much attention to a nominal tax that is refunded? Oh, yes, I suppose that the refund could be used to buy something else. And politically, the refunds may make the government look good to some voters.
The second factor is price elasticity. Retailers who sell perishable foods and women’s fashions understand this. Grocers reduce the price of decaying lettuce to persuade customers to buy it before it becomes unsellable.
Same with women’s fashions towards the end of a season. Our .