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A Mixed Bag

Kitty Miv, Editor
02 July, 2019

This week's column is set to be something of a mixed bag, with a broad environmental tax focus, starting in a spectacularly literal move on my part, with a story on plastic bag taxes.

The aforementioned plastic bag tax is being developed by the Swedish authorities as one of a number of reforms.

Under the environmental tax announced earlier this month, the Swedish Government will impose a SEK3 tax per plastic bag used by consumers in retail outlets. Certain thinner bags will be taxed at the lesser rate of SEK0.30 per bag.

The aim of the plastic bag tax is to help Sweden meet EU plastic bag use reduction targets.

The tax will be imposed on manufacturers and importers of plastic bags. Garbage bags and freezer bags will be exempt from the tax.

In Ireland, meanwhile, in a somewhat further-reaching move, the Irish Government recently announced plans to quadruple the carbon tax rate by 2030, as part of a major new package of policies aimed at combating climate change.

According to the Government's new Climate Action Plan, "taxation policy can play a central role in incentivizing the behavioral change necessary to reduce greenhouse gas emissions." The Plan commits the Government "to having in place a taxation framework, which plays its full part in exerting, along with other available policy levers, the necessary leverage to reduce our emissions."

The carbon tax is currently charged at EUR20 per ton of CO2 equivalent. The charge is paid by the importer or the extractor on the content of fossil fuels. The rate has not changed since 2014.

In Canada, things appear to be heading in the other direction, with the Albertan Government announcing that it will challenge the constitutionality of the federal carbon pricing system in the provincial Court of Appeal.

Alberta's recently elected Government abolished the province's carbon levy with effect from May 30, 2019. The levy entered into force in January 2017 at a rate of CAD per ton of CO2 emissions, and rose to CAD30 from January 2018.

The federal Government has announced that the federal carbon tax will apply in Alberta from January 1, 2020. Under the federal Greenhouse Gas Pollution Act, the federal Government can impose a carbon price backstop on any province or territory that does not have a carbon pricing policy or whose price falls below that set by the backstop.

On June 20, the Albertan Government announced that it had filed a reference to the Alberta Court of Appeal to challenge the constitutionality of the federal carbon tax. According to the provincial authority, the tax disrupts the balance of Canada's federation by undermining Alberta's exclusive power to manage its own local undertakings, natural resources, economy, and greenhouse gases emissions plan.

Albertan Premier Jason Kenney argued that: "The federal carbon tax is a clear invasion of Alberta's jurisdiction – it is all economic pain for no economic gain. This federal cash grab will only punish Albertans for heating their homes and driving to work."

And it is on that uncharacteristically contrarian note (although it's worth observing that Saskatchewan, Manitoba, and Ontario have each undertaken provincial legal proceedings to challenge the constitutionality of the federal pricing system), that we close the bag on this week's column – until next time!

Tags: Government

About the Author

Kitty Miv, Editor

Kitty was born in Argentina in 1960 to a Scottish cattle rancher and his Argentine wife. Educated in Edinburgh and at Princeton, Kitty worked for the World Bank as an economist, where she met and married an emigre Iranian banker. During her time with the Bank, Kitty worked in a number of emerging markets, including a spell in the ex-USSR as a Transition Economies Team Leader. Kitty is now a consultant in Brussels and has free-lance writing relationships with a number of prominent economic publications. kitty@lowtax.net


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