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Alberta carbon tax comparison to PST ‘stupid’: Calgary economist

Carbon tax and PST two completely different things, say economists

The Alberta government's carbon levy will cost consumers more at the pump.

Torstar News Service

The Alberta government's carbon levy will cost consumers more at the pump.

Any comparison between the NDP’s carbon tax and a provincial sales tax is outright stupid, according to a Calgary economist.

As MLAs continue to debate the government’s proposed legislation that ups gasoline and natural gas prices, the Wildrose tends to liken the legislation to an incognito PST. 

But University of Calgary economist Trevor Tombe disagrees with the Wildrose’s assertion. He said there’s much more to the carbon levy. 

“People who are trying to compare it to a sales tax are trying to score political points rather than inform the public about the underlying economics involved,” Tombe said. 

What connects the two is how much revenue both taxes will generate, according to Jack Mintz, president’s fellow at the School of Public Policy at the University of Calgary.

He said both a 3 per cent HST and the NDP’s carbon levy would increase government revenue by about $3 billion, respectively. 

But an HST and carbon tax widely differ in how they’re applied, Tombe added. 

He said an HST applies to almost all goods at an even rate, whereas the carbon tax only applies to products that require carbon to make. Such products will change in price in accordance to the intensity of carbon associated with them.

For example, goods like clothing will likely see their prices increase, but by about less than 1 - 2 per cent, Tombe said. 

Where the real economic benefit can be found, though, is by using the carbon tax and a potential HST to reduce income and corporate taxes. 

“By doing that, you’d yield significant gains overall,” Tombe said.

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