'We're only seeing half the picture': Economists question government-funded anti-carbon tax study

Environmental economists have questions about a paper that claims a federal carbon tax will cost the Saskatchewan economy millions of dollars.

Earlier this week, the provincial government released a report stating that a tax on carbon could cost the provincial GDP approximately $16 billion dollars between now and 2030.

That's not what the report says at all.- Economist Dale Beugin

The government-funded, University of Regina-led study said an increase in price for gasoline and natural gas will increase the price of production all throughout the economy.

However, an ecological economist at the U of R says the report doesn't look very deeply at where the carbon tax revenues could end up.

"We're only seeing half the picture if we're looking at how much money is spent without seeing what are we going to do with that money," said research fellow Brett Dolter. "If you don't account for that, it's like imagining its disappeared or someone's just taken it and burned it."

Dolter said there are many different places carbon tax money could go from taxpayer rebates to businesses coping with the new financial strain.

"Are we going to give it back in the form of cutting income taxes, cutting sales tax?" he asked. "Are we going to give people cheques to offset the impact?"

Checking the math

Meanwhile, Canada's Ecofiscal Commission also has questions about the report. The commission said there are discrepancies between the larger report written by the university and the claimsthe province has been making.

"(The province) is representing the impacts of this policy as driving the economy into recession," said executive director Dale Beugin. "That's not what the report says at all."

Instead, Beugin said the main report shows the level of GDP would be two per cent less than it would have been in the absence of the policy.

"The GDP is still growing," he said. "It's just growing very slightly slower."

Ultimately, Beugin said he believes a carbon tax is one of the cheapest, most effective ways of lowering greenhouse gases.

"The paper itself says carbon pricing is an effective way to reduce GHG emissions," he said. "So, let's not lose that thread. Let's not bury the idea that this is a really good way to reduce GHG emissions."

The "computable general equilibrium (CGE) model" used in the study incorporated publicly available statistics from sources like Statistics Canada.

The study's most conservative scenario shows a carbon tax of $50 per tonne would hinderprovincial GDP by 2.43 per cent, or $1.8 billion annually, a provincial government release said.

The study also looked at potential impacts on the environment and says a federal carbon tax would reduce greenhouse gas (GHG) emissions by less than one megatonne, which is approximately 1.25 per cent of the province's total emissions and would result in a cost to GDP of $1,890 per tonne, according to the government.