Why Energy Tax Breaks Harm Food and Environment

One nice thing about early posting of the fixed date for Ontario’s upcoming election (October 6, don’t you know?) is that all parties have the same lead time to drop early platform stupidities without too many people noticing.

The NDP would be smart to use this headstart to bury promises to phase out harmonized sales taxes on car fuel, home heating and electricity.

The small amount of money at stake – less than ten dollars a week for a typical family with a typical car and energy costs – is too paltry to inspire a sense of hope or meaning, but too high-profile for the NDP hide that it’s breaking faith with tax equity, environmental protection and positive government.

Released in late June, the NDP platform, called “Change that Puts People First: Plan for Affordable Change” starts by describing Ontario’s sluggish economic recovery as squeezing families, “especially middle income families.”

This identification of middle income families as the NDP’s most favored voting base will surprise many in social and public health movements, who usually see the NDP as prioritizing the needs of working people and the poor.

Though it’s true to say that middle income families have not kept up with the rich as well as they did some 30 years ago, a recent study of Toronto’s “three cities” (the rich, middle class and poor) by renowned University of Toronto scholar David Hulchanski proves that the poor have suffered more, both absolutely and relatively, than middle income earners over the past decades.

This indicates that the NDP is not responding to social or economic needs, as much as it is catering to voting trends that have cast disgruntled middle income earners as the new “dangerous class” of Anglo-American politics.

In the NDP plan, Ontario residents will pay a billion dollars less in energy taxes by 2015. Since the tax cut is not targeted to help people having a hard times making ends meet, it will almost inevitably favor the rich. The rich have more spacious homes to heat, more appliances to plug in, and drive bigger cars with larger gas tanks. They will save most from a tax cut on energy.

In contrast to the NDP platform offering the lion’s share of billion dollar tax cuts off energy to the affluent, the NDP’s proposed transit subsidy – a government intervention designed to promote the environment while assist people on modest incomes who use public transit – only comes to a third that amount, $375 million.

The NDP policy is not only regressive on environmental and equity grounds. It’s also rolling the clock backward in terms of policy on government intervention.

The “you deserve a tax break today” approach to government remedies for people being squeezed by energy costs is ultra-conservative in its political inspiration. Traditional New Democrats identified a positive and activist role for government. Governments did things that individuals couldn’t do on their own, like support a public TV network or medicare, or to support local and sustainable foods through government purchases, or to support public-supported meals at school to give a more even chance to kids from low-income families.

Government by tax cut, by contrast, leaves government trying to wag the dog by wagging the tail of consumer demand giving consumers. This is almost certain to do one of two things wrong.

The most obvious failing is that the tax break subsidizes the cost of wasteful consumption, rather than spending tax money on incentives to buy energy-efficient appliances or cars.

The less obvious failing – less obvious only because neo-liberal framing of policy choices is so dominant that no-one even notices it anymore – is that the NDP holds out the promise that any government can improve the standard of living by reducing cost of public well-being. Policy debate about improving public well-being by improving incomes or increasing good jobs for the majority has gone by the wayside.

The last 20 years of Wal-Mart style hyper-discounting have wreaked havoc by virtue of the unemployment and low wages made necessary by feverish discounting. It’s usually fallen on parties such as the NDP to make this case to the public, and encourage people to support a tide of econo0mic growth that raises all boats. The NDP’s new tax break politics is far removed from this traditional equity-based politics.

If the NDP saw this issue through a job creation lens, it would automatically see that Ontario produces no oil, no gas, no uranium for nuclear power plants and no coal for coal plants. So why would a government artificially cut the costs of imports when it could use tax resources to stimulate local construction and manufacturing jobs in increasing production of energy efficient goods – or, to stay close to my own passion – support local and sustainable foods that require less energy to grow and less fuel to transport? Any support to cheap fuel is almost by definition support for continued imports of energy-wasteful food.

NDP tax-cutters claim that an NDP government will be able to cap gas and oil prices set by the biggest companies in the world. Realistically, oil prices will only be capped when demand goes way down, thanks to competition from either conservation or renewable fuels. NDP tax cuts give no break whatsoever to those who conserve, and no premium to those who use renewable fuels. Such tax breaks, therefore, indirectly support high demand that keeps prices up.

Pure pipedream is the NDP promise to make up for revenue lost from energy tax cuts by blocking a Conservative and Liberal tax cut for corporations. A party that panders to middle class tax angst is going to take on global corporations? In their dreams.

NDP tax breaks for energy use shred environmental credibility for the NDP.

One longtime and steadfast environmental advocate working for the government ranted at me that NDP leader Andrea Horwath “spoke as much in bumper sticker slogans as the Conservative Hudak.” There’s a green energy revolution going on to promote conservation and renewables, the aide said, “and the NDP is not on side.”

Green leader Mike Schreiner also despairs. Schreiner backs an old idea from Bob Rae’s NDP government to add to the tax of energy-guzzling cars and distribute that tax premium as rebates (feebates) to people who buy energy efficient cars. Most people would save more from using less gas in their cars or other appliances than they would from paying less tax on over-used resources, Schreiner says. Any subsidy to discount the cost of fuel when pollution from fuel harms the environment and public health “is a totally perverse subsidy,” he says.

My advice to NDP leaders, especially those promoting equitable environmental protection policies: better to suffer momentary embarrassment by retracting now than to be humiliated for being on the wrong side of principles long espoused by the NDP.

(adapted from NOW Magazine, July 7-14, 2011)

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