Photo Credit: Bloomberg Hello Canada! Are you ready — ready for a new national tax on carbon that will ding pocketbooks across the country? My bet is that a new carbon tax is coming, made almost inevitable by Prime Minister Stephen Harper’s full-bore push to secure Washington’s approval of the Keystone XL pipeline.
For early clues on the carbon tax/Keystone trade-off, tune in Tuesday night to President Barack Obama’s State of the Union address. As the president speaks, he will be alert to the chorus of Hollywood stars, environmental activists, editorial writers and industry leaders who are pushing for him to make the biggest climate-change decision he can possibly make: Impose a carbon tax.
It is time Canadians became aware of the giant trap being set in Washington over Keystone. The short version is this: The president approves Keystone, greatly expanding the flow of Canadian oil sands production into the United States. In return, however, Canada has no choice but to accept a carbon tax at home as part of a grand bargain.
I first mentioned the likely Obama pipelines-for-taxes strategy in comments at the annual Financial Post forecast luncheon at the New Year. “I see new taxes coming in the United States, including an energy or carbon tax, to try to cover the deficits. The new energy tax would serve as partial cover for President Obama’s approval of the Keystone XL pipeline.”
That Mr. Obama might offer some kind of carbon tax as a carrot to environmentalists and climate activists opposed to Keystone has since emerged as more than plausible. Wall Street Journal columnist Kimberley Strassel recently outlined how the president might demand a carbon tax in return for approval of energy projects, including Keystone. Getting a carbon tax through Congress looks tricky. But Ms. Strassel reported that California Senator Barbara Boxer outlined how a carbon tax could be imposed administratively through the Environmental Protection Agency.
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