Report: Nova Scotia Should Implement a Carbon Tax to Boost Economy

Nova Scotia

By Maura Forrest

November 27, 2014

Nova Scotia should adopt a carbon tax and expand its harmonized sales tax to help put a stop to the province’s steady economic decline, according to a new review of the province’s tax system.

The report, released by former Ontario cabinet minister Laurel Broten, delivers 22 recommendations for reforming the tax system, including cuts to income and corporate tax rates, and a freeze on government spending.

The carbon tax is part of Broten’s proposed shift toward taxing consumption instead of income. In the report, she argues that a reliance on revenue from income tax in a province with an aging population will put an unfair burden on young people.

“Younger Nova Scotians are already prone to look outside the province for economic opportunities,” the report says. “Place an additional economic burden on them through higher income taxes in order to pay for services needed by retiring baby boomers, and their exodus is likely to escalate.”

The tax would function like B.C.’s carbon tax, which has been in place since 2008, and which has produced a 17.4 per cent per capita decrease in fossil fuel consumption. B.C. now boasts some of the lowest income and corporate tax rates in the country and economic growth above the national average.

The tax would be implemented over the next 10 years, and would be revenue-neutral, meaning that revenue would be returned to taxpayers through income tax reductions.

“The best advice from around the world… is to tax what you do not like,” said Broten in an interview with CTV News. “Tax pollution. Tax consumption.”

If the recommendation were put in place, Nova Scotia would join a growing number of provinces that have put a price on carbon.

Quebec linked its cap-and-trade system with California’s carbon market earlier this year. Now, a new agreementbetween Quebec and Ontario hints that Ontario is looking seriously at establishing its own carbon market.

Alberta has also implemented a performance regulation that allows it to fine any industry that emits more CO2than its maximum allowable emissions intensity.

Broten’s proposal has received mixed reactions in Nova Scotia. Progressive Conservation Leader Jamie Baillie called the carbon tax “job killing.” “It’s just the wrong way to go,” he said in an interview with CBC News.

But Valerie Payn, CEO of the Halifax Chamber of Commerce, told CTV News that she endorses the tax on pollution. “It has worked in other jurisdictions – why wouldn’t it work here?”