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EDITORIAL: Carrot or stick?

A carbon tax on P.E.I. will mean an estimated two cents per litre increase on gasoline each year for five years.
A carbon tax on P.E.I. will mean a significant increase in the price increase on gasoline by 2022. - FILE GRAPHIC

P.E.I. is using some 32 incentives and conservation measures as a way to avoid a carbon tax

Islanders are breathing a sigh of relief after the provincial government released its climate change strategy last week. There were mixed signals and course changes over the past two years, but now it’s official — there will be no carbon tax. That is, unless Ottawa intervenes and decrees P.E.I.’s plan is insufficient to meet federal requirements.

P.E.I. is using some 32 incentives and conservation measures as a way to avoid a carbon tax. The no-tax plan might upset environmental activists intent on immediate action to reduce carbon emissions. And there are climate change deniers who believe the threat from greenhouse gas emissions is a myth and a waste of money.

RELATED: UPDATE: No carbon tax in P.E.I. government's climate-change plan

A majority of Islanders do care about the environment. We want safe water, clean air and land protection. Citizens are willing to sign onto this strategy as long as the cost isn’t too high. The province has tried to strike a balance between cost to taxpayers and achieving reduction targets.

Ottawa told the provinces to come up with their own carbon reduction plans or face having a carbon tax imposed on them. If such a tax was introduced here, it would start at $20 per tonne of emissions Jan. 1, 2019, resulting in an immediate increase of 4.6 cpl in gas and 5.2 cpl in fuel oil. This would increase in 2022 to $50/tonne which means an 11.5 cpl increase in gas and 13.6 in heating oil. Recent price jumps have gas at over $1.30 cpl, and the promise of more to come as the busy summer driving season approaches. Islanders think they are already paying quite enough.

Experts insist that carbon pricing is a practical and cost-effective measure to reduce carbon emissions and spur innovation. Islanders are not convinced. If Ottawa did impose its carbon price on Islanders, the province would receive revenues — estimated at $23.5 million in the first full year, and rising to $58 million by 2022. Those revenues create opportunities to reduce personal and corporate taxes, or the province could use the money to invest in low-carbon technologies.

But with too many unanswered questions, the P.E.I. government — facing the reality of a backlash against another tax, and with an election approaching — took the politically prudent course of action, using incentives. The province is confident of hitting targets without more taxes. Let's hope that government is right.

The provincial budget brought down last month was silent on a carbon tax, sending a clear signal the province wanted to avoid such a measure at all costs. But there are ominous rumblings that P.E.I.’s plan to reduce emissions without including a carbon tax on fuel is a mistake and that Islanders should prepare for Ottawa to impose its own tax, starting Jan. 1, 2019.

Experts identify a carbon tax as the most appropriate mechanism for P.E.I. to implement a price on carbon. The province says it never committed to a carbon tax, but prefers a "made-in-P.E.I." approach to carbon pricing.

We prefer its carrot over stick approach as well.

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