August 19th, 2019

Carbon tax and food prices


By Lethbridge Herald Opinon on April 19, 2019.

Even with rebates, consumers will feel sting of price hikes

Sylvain Charlebois

SENIOR FELLOW

ATLANTIC INSTITUTE FOR MARKET STUDIES

The carbon tax is now a reality for all Canadians – and that means food prices will be impacted.

The federal carbon-pricing scheme took effect in Ontario, New Brunswick, Saskatchewan and Manitoba on April 1. These provinces had previously chosen not to comply with the new federal law through their own initiatives. Pricing will begin in Nunavut and Yukon on July 1.

Every other province and territory already had a carbon-pricing scheme in place.

Of course, even if this new tax is paid by businesses, it will have an impact on everything we consume, including food.

Gas prices increased 4.4 cents per litre on April 1. And that’s projected to rise to 11 cents a litre by April 2022. This jump will parallel the carbon tax’s gradual increase, based on targets set by the Paris climate accord signed in 2015.

Some consumers will get rebates of up to $500 a year. Lower-income, food-insecure households, with lesser carbon footprints, will receive a rebate equal to and perhaps more than the increase in the cost of goods the new tax create. This may be good news for a demographic in need of cash.

But it’s not good news for the rest of us. We’ll face inflation at restaurants and in grocery stores whether we get rebates or not.

Energy is required to get the food, although the exact impact of the tax on food prices remains unknown. One report published in 2012 suggested that the effect of a $50-per-tonne carbon tax on food prices would be three per cent. For Canada, that would come in 2022. Given that food prices go up one to two per cent most years, a rise of three per cent is not unmanageable for most households.

While few of us enjoy paying more taxes, the reality is that climate change has had on impact on food prices for decades. Over the winter months, produce prices can go up by as much as 15 per cent in a month. Climate change has resulted in more volatile food prices in Canada.

So there is some consensus on the need to act now.

Carbon pricing may discourage food importers from buying certain goods overseas, giving local food products an opening into the market. There’s strong evidence that companies and consumers are influenced by carbon pricing and eventually make alternative choices. These choices end up being better for the environment.

Carbon pricing will no doubt discriminate against certain food categories for which the carbon footprint is more substantial. And that might seem desirable. But Canada’s nordic climate means producing food all year round is challenging.

Canadian consumers are conditioned to expect cheap food. We also expect to be able to buy whatever we want whenever we want it. However, carbon pricing will challenge these notions. The foods available and where they come from will eventually change.

Food is generally quite affordable in Canada compared to other countries. Relative to the cost of living, Canadians have access to one of the cheapest food baskets in the world. What’s rarely priced in are the environmental and social costs of producing, distributing and selling food. Some products sold to us are a bargain, given their climatic impact on our planet.

How will government spend the funds from carbon taxes?

The money may be redirected to support other, unrelated programs, as we’ve seen many times before. The federal bureaucratic machinery can barely be trusted, so discipline and transparency are necessary, especially when dealing with climate change.

The federal government should be lauded for at least doing something about climate change. And creating incentives for companies to reduce greenhouse gas emissions through carbon pricing isn’t a perfect idea but action of some sort is necessary.

If we don’t pay a price for pollution now, the future cost will likely be much greater.

But the implementation of any tax is political. And considering what’s happening with the SNC-Lavalin scandal, implementing this new tax in key regions across the country isn’t especially timely for the Liberal government.

Sylvain Charlebois is senior director of the agri-food analytics lab and a professor in food distribution and policy at at Dalhousie University, and a senior fellow with the Atlantic Institute for Market Studies. Distributed by Troy Media.

Share this story:

26

2 Responses to “Carbon tax and food prices”

  1. Dennis Bremner says:

    Sylvain said: The federal government should be lauded for at least doing something about climate change. And creating incentives for companies to reduce greenhouse gas emissions through carbon pricing isn’t a perfect idea but action of some sort is necessary.

    This is the “something is better than nothing philosophy”. The reason its stated in this way is the “perception created by those who do not think, that solving our total 1.4% GHG/CO2 emissions will somehow impact the planet, when they will not! So to compensate for the fear created by the emissions of 98.6% by other countries we do the “something is better than nothing” approach. Those that laud the fact that some governments are denying a survival wage and sending us back to prehistoric days, don’t ponder what the carbon tax will do FOR EVERYTHING you wish to buy. You will probably be right in the end, the carbon tax will drive up pricing to a point that if the NDPs $15.00 is not reached people will croaking in the streets!
    “Something is NOT better than nothing”
    We are far better off, ensuring we do not exceed the 1.4% ever, then attempting to follow people who really don’t have a clue what they are talking about. You will see many of them appear here in response to this post. What they will not do is use Alberta Governments own data to determine if “something is better than nothing”. I have news for you, sometimes nothing is better than something!
    So the intent of the NDP was to force closure on those that cannot afford to pay the Carbon Tax and drive others to insolvency only because they dare satisfy a demand, not just by Albertans, but by the rest of North America!!!
    I find it amazingly two faced that we can accomodate drug addicts and save them from themselves daily with essential services to a breaking point, yet we abandon anyone that generates CO2 because, well were treehuggers and you should be punished!!! You, who pretend to govern a society, throw good businesses under the bus but use millions of taxpayer dollars of essential services trying to save the guy/gal who willingly and repeatedly keeps throwing him/herself under the same bus for “funzies”?
    You then rescue him/her, give them more time to re-dope and then re-rescue him/her again when they throw themselves under the SAME BUS the next day. Oh, and when he/she is a little short of cash, he/she mugs, robs or does B&Es to satisfy his/her habit. How many do addicts employ, I mean other than Manning? Zero!
    Now, we get to a business employing your fellow Albertans, that has been around for 50 years, well before Treehuggers decided he was a “reprobate needing punishment for his disgusting way”s and instead of offering him the “Naloxone equivalent for his CO2 problem”, we tax him into oblivion and during his “orange crush” he drives up the price of his product so we can all share in his misery?

    Never in the history of man, have so many people accumulated in one place, performing the same stupidity together under the same banner, and called it a “society”?

  2. biff says:

    the hungrier we are, the more compliant and controllable, we are. they seem to be thinking their sweet spot for the masses can be tied tighter still. the “free” world ever more becomes the “fee” world.
    it has been sung, “a hungry mob is an angry mob”…but things are so fully orchestrated by the string pullers today, such that we can be led to believe we are full, and our anger can be diverted to that which matters least.