Friday, June 27, 2008

Oops he did it again

Reading the story this morning in the Globe and Mail where Mr. Dion admitted that the Carbon Tax in his Carbon Shift plan would impact Alberta and Saskatchewan the hardest left me shaking my head.

I have to admit, my first reaction was "What are you thinking?"

However, thinking more deeply on it I find myself impressed. I for one am tired or politicians who lie to me about the tough issues. Mike Harris claimed that he could reduce my taxes by 30% but still maintain the level of government services that I had become accustomed to. Larry O'Brien, the Mayor of Ottawa, stated he could freeze property taxes and still maintain services. Of course both were wrong and I cannot shake the feeling that they knew their promises would be impossible to keep when they made them. In other words, they told the voters what we wanted to here, knowing it was untrue and enough voters in both cases believed them.

Stephane Dion has taken a different approach. He has come right out and said the Carbon Tax will have an impact on producers of high carbon products and it so happens most of those producers are in Alberta and Saskatchewan. Politically, it is bass ackwards but from the standpoint of integrity you really cannot find any fault. Perhaps, Mr. Dion is going to be a different kind of politician.

Then I began looking at the impacts. By Mr. Dion's reckoning 40% of the revenues from the Carbon Tax will be from the two provinces I mentioned. If the total projected revenus of $15 billion is correct the 40 % works out to $6 billion. Forgive me, but when you compare that to the profits that the oil and gas extraction companies are making these days $6 billion is not really going to make that much of a dent. And that is assuming these companies do not pass on at least some of the cost of the Carbon Tax to consumers, which we all know is not going to happen.

So really, the oil and gas industry in Alberta and Saskatchewan should be more concerned about the continuing economic slowdown in the US and what that could do to the economies of China and India. Because the impact of simultaneous slowdowns in those three countries will have a much greater impact on the oil and gas industry than Mr. Dion's Carbon Tax.

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