Canada's carbon tax "has a negligible impact on inflation" claim 200 Canadian economists in an open letter defending the tax. However, their only citation for this claim is a flawed Bank of Canada analysis.
Economists' support for federal carbon tax seems like a lot of hot air | Toronto Sun | Brian Lilley:
March 27, 2024 - "The headline made it sound pretty clear, 'Economists defend Liberals’ carbon price as political rhetoric heats up.' A story under a headline like that might make you think there was a hefty defence laid out for the carbon tax being imposed and soon to be increased by the Trudeau Liberals. You’d be wrong if you read the story, but you’d also be wrong to think there was a robust defence of the carbon tax in the open letter from economists that it was based upon....
“The letter ... address[es] what they said were five myths about the carbon tax. Given that this letter is from economists, it’s the portion that discusses the impact of the carbon tax that caught my eye. The letter claims that the carbon tax is not affecting inflation and then cites ... a thoroughly debunked claim from the Bank of Canada as proof. 'According to the Bank of Canada, carbon pricing has caused less than 1/20th of Canada’s inflation in the past two years,' the letter says.
"This claim was made by bank governor Tiff Macklem last fall and was widely reported, but never fact-checked by the media. Instead, asking the bank how it got to that figure fell to academic Sylvain Charlebois. Charlebois, the senior director of the Agri-foods Analytics Lab at Dalhousie University who is also known as the 'Food Professor,' asked the bank to explain how it arrived at that claim. Given Charlebois’ interest in food prices and food inflation, the answer was shocking.
"The Bank of Canada admitted that it only looked at the impact of gasoline, heating oil and natural gas when applied directly to the consumer to arrive at its claim that the carbon tax is responsible for less than 1/20th of Canada’s inflation. That ... fails to take into account the pass-through impact of the tax on consumers.
"A cucumber grow[er] in one of southwestern Ontario’s many greenhouses would have to pay the carbon tax on the CO2 used to grow the cucumber[s]. The trucking company that picked up the cucumber would have to pay the carbon tax on the fuel used to transport the cucumber. The warehouse that stores the cucumber and the store that sells it will both pay the carbon tax on keeping that cuke cool. You will only pay the carbon tax on the gas it takes for you to drive to the store and that is all that the Bank of Canada uses to assess the impact on inflation, not all of the other steps that increase the price.
"It’s a lazy method for the Bank of Canada and it’s lazier still for these economists to use that as their measurement when claiming to refute myths about the carbon tax.
"Yves Giroux, the parliamentary budget officer, looked at the full impact of the carbon tax — from what we all pay, the lower economic growth, the increase in prices, the increased amount of GST we pay — and arrived at a basic conclusion: Most of us are paying more. 'Once you factor in the rebate, but also the economic impacts, the majority of households will see a negative impact as a result of the carbon tax,' Giroux told a House of Commons committee last week.
"That’s not something these economists mention. Instead, they spend more time repeating government talking points and sounding like Liberal MPs than they do in providing evidence for their claims."
Trudeau's Carbon Tax Drives Inflation | Kyle Seeback | February 27, 2024:
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