The American and Canadian administrations are apparently in agreement that the two countries need to harmonize their carbon pricing schemes, but what if, as the likes of Matthew Yglesias, Ezra Klein, Kevin Drum and Michael Bloomberg have argued this week, the United States ends up pursuing a carbon tax? Klein says it’s might be the best option.
At this point, the politics of climate change are dismal. But the reality of the budget situation makes new taxes inevitable. Among the few promising routes left for climate hawks is convincing the political system that if we need more taxes, a carbon tax makes more sense than a VAT. Because we will need more taxes. Perhaps the fiscal crunch can do what climate science could not.
Recall here that, despite his warnings that a carbon tax would both “screw everybody” and possibly unravel the country during the 2008 election, the Prime Minister did not entirely dismiss the possibility of such a policy when asked about harmonizing environmental agendas with the United States during 2009 interview.