Achieving Climate Objectives - City Option Carbon Tax and Transit

Carbon tax and transit - give cities a choice

The federal government should pass legislation that would allow cities to ask for a carbon tax on transportation fuel to be applied within their boundaries.  All money collected through this tax would be used to improve local transit infrastructure and ridership.  A city willing to take the political risk of asking for a tax will receive federal matching funds, also dedicated solely to tansit.

 Commercial users of energy for moving passengers or freight already extend themselves to minimize their fuel costs.  They should get a 110% rebate (an extra for the increased paperwork, and support for the program).

Federal matching funds is both a huge carrot and a great marketing tool for a local government willing to take a major political risk for an aggressive environmental agenda.  Only a city that asks for a carbon tax devoted to transit gets one.  Towns without transit and rural areas could never face such a tax.  The federal government can support the most aggressive big city environmental agenda without imposing that agenda on others. 

Ottawa would be sending substantial funds for transit to a city without the involvement of the province. 

 

Administrative and political costs

The idea is simple.  The implementation is not.

It will take a lot of work to set up a separate federal tax within a municipal boundary.  Commercial users will game the system by fuelling up in untaxed adjacent jurisdictions and claiming the rebate.  Fuel vendors on opposite sides of a boundary between taxed and not taxed jurisdictions will have equity issues.  It’s a tax increase!

These problems are real and difficult.  Does that mean the project is too difficult or that the difficulties must be recognized and overcome?

Take a difficult sell to a biased local market

Selling a tax increase is always a difficult political problem.  Let the first marketing effort be done in a receptive city, by a municipal government with an aggressive environmental agenda.  A partner city will enjoy employment and infrastructure benefits that are immediate and visible in addition to the original purpose of a carbon tax: increasing the price of fuel to reduce consumption through market effects. 

Best Practice can’t be imposed from above.  It’s a co-operative, team approach that can only succeed with motivated partners devoted to helping each other to solve problems because both win big when it succeeds.  A mayor with voter support for a green agenda will be much more effective at addressing the problems listed above than would any politician facing an environmental initiative imposed on them that they do not support. 

It only has to work once.  Other cities will join once an effective revenue stream for transit independent of real estate tax, the fare box, or the province has been demonstrated.