Quebec fails to take the eco-tax shift

The Quebec government fails to use the full potential of the economic instruments at its disposal to promote the shift to a green economy, according to the Commissioner for Sustainable Development, who released his annual report Wednesday morning.

The government has assured for years that it wants to make greater use of measures based on the principles of eco-taxation, eco-conditionality and eco-responsibility. These are, for example, taxes on polluting products, subsidies conditional on compliance with environmental criteria or targeted tax credits.

It’s a bit like the Green Fund: there is a lack of transparency, monitoring and accountability

However, Commissioner Paul Lanoie notes that the Ministry of the Environment and the Fight against Climate Change (MELCC) and the inter-ministerial committees that he chairs have failed to steer the state apparatus in this direction. In addition, the effectiveness of existing measures is rarely evaluated, so that it is difficult to know whether they really contribute to protecting the environment and reducing greenhouse gas (GHG) emissions.

“It’s a bit like the Green Fund: there is a lack of transparency, monitoring and accountability” about the government’s eco-taxation measures, notes Johanne Whitmore, principal researcher at the Chair in sector management. energy at HEC Montreal, after reading the report.

No clear signal

Departments and agencies have no “clear signal” from the MELCC to increase their use of economic instruments for ecological purposes, said Mr. Lanoie. Furthermore, the objectives in this area of ​​the 2015-2020 Government Sustainable Development Strategy are not precise. As a result, since 2015, only eight new measures have been implemented. The potential impact on the environment of several of them “seems limited”, notes the commissioner.

To remedy the situation, “it is clear that there needs to be a signal from the highest possible government body,” observes economist Luc Godbout, of the Université de Sherbrooke, who chaired the 2014-2015 Québec Taxation Review Board. “As long as the Ministry of the Environment and the Ministry of Finance do not work hand in hand,” he adds, “eco-taxation will have a hard time gaining importance in Quebec. “

After the United States, Quebec and Canada are the two OECD governments that collect the least amount of environment-related taxes. In the province, only 3.6% of total tax revenue is in this area, while the OECD average is 6.8%.

As for the subsidies offered by Quebec – which are rarely conditional on the achievement of environmental objectives -, the summary of the commissioner’s report mentions a “missed opportunity”.

“Despite an estimated budget of $ 7.6 billion in 2018-2019, the granting of financial assistance through standardized programs is rarely linked to compliance with environmental conditions or eco-responsibility criteria,” said Mr. Lanoie during the presentation of the document to the National Assembly.

However, this type of measure has interesting potential, notes Michael Robert-Angers, a researcher from the University of Sherbrooke who is interested in eco-taxation. He gives as an example tax credits in the IT sector.

“We could look at where the server is located,” he says. Is the server powered by a coal-fired power plant? This could be a criterion to add to ensure that money maximizes the environmental benefits. “

In ecofiscal matters, an idea that often comes up is that of adjusting the acquisition taxes or vehicle registration fees according to their engine size. Under this “bonus-malus” system, the entire amount collected from owners of polluting vehicles would be redistributed to those who drive in less fuel-efficient cars.

According to Johanne Whitmore, this type of measure is essential to achieving Québec’s ambitious GHG emission targets. Luc Godbout believes that changes must come quickly, after years of palaver. “Maybe we shouldn’t think that the timing is not good because of COVID, he says. In fact, maybe the timing is better than ever. “

The office of the Minister of the Environment denied that he was behind the problems raised by Mr. Lanoie. “Unfortunately, we still see traces of the Liberal reign in the report that the Sustainable Development Commissioner tabled today,” said the attaché of Benoit Charette in a written response. He says the government is working to establish a “true culture of sustainable development” within the state and that its strategy to fight climate change will be released in the fall.

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