Psst, Trudeau: IMF Pegs Our Fossil Fuel Subsidies at $46

[Oscar]

Psst, Trudeau: IMF Now Pegs Our Fossil Fuel Subsidies at $46 Billion

[ http://www.thetyee.ca/Opinion/2016/02/0 ... Subsidies/ ]

Fastest way to transition Canada to a green economy? Quit the giveaways.

By Mitchell Anderson , TheTyee.ca February 1, 2016

According to IMF economists, Canadian carbon-based fuels should be taxed an additional $17.2 billion annually to compensate for climate change.


Justin Trudeau has a problem. How can Canada meet our international climate commitments so recently inked in Paris with an increasingly empty economic larder? The International Monetary Fund may have the answer. Last summer, the IMF updated its global report on energy subsidies and found that Canada provides a whopping $46.4 billion in subsidies to the energy sector in either direct support or uncollected taxes on externalized costs.
[ http://www.imf.org/external/pubs/ft/sur ... 70215A.htm ]

Globally, this figure balloons to US $5.3 trillion or 6.5 per cent of the world's GDP. To put that enormous sum in perspective, the global giveaway to the energy sector amounts to 40 times more money than is contributed in aid to the world's poorest people. [ https://en.wikipedia.org/wiki/Aid#Extent_of_aid ]

To be clear, the IMF is including all untaxed externalized costs of energy use under their definition of subsidies. The figures flagged for Canada still include $1.4 billion in direct "pre-tax" subsidies -- the kind of direct public giveaways that Trudeau campaigned to eliminate. The remaining $44.6 billion is in the form of externalized costs to society from dirty and dangerous fossil fuels -- things like air pollution, traffic congestion and climate change.

I realize that the folks at the Fraser Institute might get rankled by such a broad definition of subsidies by those pinkos at the IMF, and in fact they already have. [ http://www.fraserinstitute.org/blogs/is ... ubsidizing ] But as they say in business, there's no free lunch, so why should all taxpayers have to pick up the tab for very real costs resulting from our ongoing addiction to fossil fuels?

Let's get down to brass tacks. How much money is being left on the table in favour of the fossil fuel sector? According to IMF economists, Canadian carbon-based fuels should be taxed an additional $17.2 billion annually to compensate for climate change, $6 billion for air pollution, $14.9 billion for traffic congestion and $2.1 for traffic accidents. Tacking on another $3.5 billion for uncollected value-added taxes, $880 million for road damage and of course the $1.4 billion in direct subsidies, we arrive at almost $50 billion annually that could help transition to a greener economy.

That's a lot of subway

And what could Canada do with another $46 billion each year? In terms of badly needed public transit, we could immediately pay for both the new Broadway SkyTrain line and the Bloor Street subway extension in Toronto, and still have $40 billion left over. There are also 120 kilometres of proposed light rail projects in the country we could finally build and only be down to $35 billion. [ https://en.wikipedia.org/wiki/Light_rai ... es_by_city ] Remember, these badly needed infrastructure investments are one-time expenses and the subsidies identified by the IMF rack up every year.

Other urgent needs include building and maintaining affordable housing, estimated to be about $3 billion annually. [ https://www.fcm.ca/Documents/reports/FC ... ada_EN.pdf ] The public portion of a national pharmacare program might amount to an extra $1 billion each year (though it could also save us money too). [ http://www.cmaj.ca/content/early/2015/03/16/cmaj.141564 ] That still leaves billions of annual public revenue that could provide tax relief to those shifting away from fossil fuels as well as transition training for displaced workers in our beleaguered oil sector.

So is Ottawa going to eliminate all $48 billion in giveaways identified by the IMF? Of course not. Politics is the art of the possible, and public opinion -- while heading in the right direction -- is not there yet.

For instance, $30 billion of our total subsidies flagged by the IMF are for petroleum. Canadians buy around 58 billion litres of gas and diesel each year. [ http://www.statcan.gc.ca/tables-tableau ... 7c-eng.htm ] Covering all externalized costs of that fuel use would require additional taxes of about $0.50 per litre, a tall order even for a politician of Trudeau's current popularity.

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[ http://www.thetyee.ca/Opinion/2016/02/0 ... Subsidies/ ]