Progressive Conservative carbon tax impact exaggerated, says expert

A leading expert on carbon taxes says New Brunswick's Progressive Conservatives may have dramatically exaggerated the impact of the tax on the province's families.

Jennifer Winter of the University of Calgary says the $1,200-per-year cost estimate that PC leader Blaine Higgs has cited during the election campaign is twice as high as her own.

Winter's calculation puts the figure at $525 in direct costs. She says she tried several different calculations to reach the PC figure and couldn't match their number.

"To me that means they made a math error … or they used inflated assumptions about driving habits or average vehicle fuel efficiency," she said in a blog post this week.

Winter is an economist who oversees energy and environmental policy research at the University of Calgary's school of public policy.

Calculations revisited

In a Monday blog post, Winter said the PC's figure of $1,200 caused her to revisit an earlier calculation she made for a presentation to the Senate last year. In that paper, she put the New Brunswick figure at $964.

She said to come up with $1,200, the average household emissions in New Brunswick would have to be 24 tonnes of carbon dioxide a year, taxed at the federal requirement of $50 per tonne.

But she said data on household energy use from 2015 suggest the average household emits 10.5 tonnes — less than half. That produces her figure of $525.

The party said Tuesday its numbers come from an article in Maclean's in 2016 by another University of Calgary economist, Trevor Tombe. It estimated direct carbon-tax costs in New Brunswick at $750 and indirect costs at $500.

"We didn't make them up or invent them, so that's where they came from," Higgs said.

The PCs say an eventual 12-cent-per-litre carbon tax at gas pumps will not only cost more there, but will also have spinoff effects that will ripple through the economy — increasing the cost of transporting goods that will then be passed on to consumers, for example.

Different assumptions, different data

Winter said in an interview she would not dispute Tombe's 2016 calculation but said they could be based on "potentially different assumptions and potentially different data."

"If politicians are going to make statements like this … they should be stating where their analysis is coming from and the assumptions they're making."

The PC party's $1,200 figure assumes the federal government will impose its carbon price on New Brunswick effective Jan. 1.

The Liberal government's carbon tax plan shifts a portion of the existing 15.5-cent-per-litre gas tax to a climate fund. This year it's shifting 2.3 cents. By 2022-23 it would reach 11.6 cents a litre, with no net increase in cost to the consumer.

But that plan is likely to violate the federal climate plan, which requires a net increase on the price of carbon emissions. It also says the tax must apply to home heating fuels, which are exempt under Premier Brian Gallant's plan.

If Ottawa confirms the Gallant plan doesn't measure up, it will impose its own price on the province.

Higgs hadn't read Winter's analysis when he was asked about it Tuesday morning. He offered to read it and respond in more detail later.

"We will look at it and do that comparison, but I haven't seen that."

Consumer decisions set true cost

Winter says the true cost of a carbon tax "is really going to depend on consumer decisions." People who choose more fuel-efficient cars or adopt better home-heating systems will pay less — exactly how a carbon tax is supposed to work to alter behaviour.

Winter also writes that the $1,200 estimate doesn't take into account that "there are many ways governments can use these [carbon tax] revenues to lower the burden on households and firms."

That actually dovetails with Higgs's promise that if a court challenge to Ottawa's system fails, he'll find a way to erase the cost impact on New Brunswickers.

The PC leader says he'd either rebate any New Brunswick carbon tax revenue that Ottawa turned over to the provincial government, or would cut other taxes by an equivalent amount to what people end up paying.

"Money that comes in on a carbon tax will go right back out into people's pockets," he said.