Diesel and Dust

Well, the Tories are nothing if not consistent. During the NDP’s BC campaign against the carbon tax, I wondered whether they would follow the logic – if you don’t like a carbon tax then it only makes sense to call for a cut in the provincial fuel tax. Federally, the Harperites have seized the initiative on this one, building on their anti-carbon-tax campaign by calling for cutting the federal excise tax on diesel and aviation fuel. This cut from 4 cents a litre to 2 cents a litre will cost the treasury $600 million a year.

This is precisely the wrong direction given the urgency of climate change. The message is exactly opposite that of the carbon tax: the more you burn, the more you save. Another demonstration, as if one was needed, that the Tories are not at all interested in addressing climate change. And given that aviation is a major source of emissions, one of the largest per kilometer travelled.

While this policy is being pitched at benefiting ordinary Canadians struggling with higher energy costs, the real winners are the big oil and gas companies. Indeed, there is good reason to call for an excess profits tax on the windfalls that are being reaped in the oilpatch on investments made back when the price of oil was a third of today’s levels. That money could be returned to Canadians in the form of a major refundable tax credit, or even as a per-family amount – and it would do a lot more to address concerns about energy prices than Harper’s tax cut.

But for the Tories the answer to every problem is a tax cut. So not much surprise here. A new question for them is how they are going to pay for it. Already the federal budget is on a knife edge with the Tories squandering all of the surplus room inherited from Paul Martin, and mostly on tax cuts. As the economy turns down that will push the budget position into deficit. But Harper would never run a deficit, and would never revoke tax cuts. This leaves one option, spending cuts.

So here’s my prediction: in a late-October Economic and Fiscal Update, Finance Minister Flaherty will be telling us he needs to cut spending in order to keep the budget balanced. Then let the dismantling begin!