World to Canada: You’re raising your carbon tax during a global pandemic? via fpcomment
Prime Minister Justin Trudeau has chosen to make life more expensive for Canadians by raising the federal carbon tax by 50 per cent amidst the COVID-19 economic and health crisis. Meanwhile, governments around the world are moving in the opposite direction. Why? Because hiking taxes during a global pandemic is a bad idea.
The European Union’s cap-and-trade scheme, which applies to 30 countries, has also seen its carbon tax rate drop significantly. For most of 2019 and early 2020, EU carbon prices traded around €25 per tonne before nosediving to around €15 per tonne in March. The EU’s cap-and-trade carbon tax rate, which varies according to market conditions, has fallen 32 per cent below its 2020 peak, according to the most recent data available.
Estonia’s finance minister, Martin Helme, formally called for his country to consider leaving the EU’s cap-and-trade carbon tax system to provide relief for taxpayers. The prime minister later announced that Estonia would not seek to leave the EU’s carbon tax system but lowered the excise tax on electricity to the minimum allowed by the EU and also reduced its excise taxes on diesel, light and heavy fuel oil, shale oil and natural gas.
It’s worth noting that Canada’s carbon tax is not likely to have any meaningful impact on global emissions. According to the World Bank, only 45 countries are covered by a carbon tax and only 15.6 per cent of total world emissions are covered by these carbon taxes. Furthermore, about half of the emissions covered by carbon taxes are priced below US$10 per tonne of CO2 emissions, significantly lower than Canada’s federal rate and too low to really make a difference.
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