Gas guzzlers will be dinged with a new tax of up to $4,000, fuel-efficient cars will get a rebate worth up to $2,000 and old wrecks will be offered a short-cut to the junkyard, under today's federal budget.
The boldest initiative is probably the system of car rebates and taxes, which unabashedly uses the tax system to influence consumer behaviour, something that environmentalists have long advocated.
Although most provinces have rebate programs for fuel-efficient cars, only Ontario has a tax on gas guzzlers. The federal Liberals never dared to implement such a system although it was carefully considered. It will likely meet fierce disapproval from the Ontario-based auto industry.
Finance Department officials say the rebates and levies will basically cancel each other out, leaving the government with the same amount of revenue as before. But they acknowledge there are no studies to prove that the tax changes will actually influence buying patterns.
A revenue neutral, tax and rebate system, to entice compliance and reduce emissions- where have I heard this philosophy before? This is a great idea, partisanship aside. When you couple these rebates with provincial ones, like the proposed 2000 dollar PST cut for hybrids in British Columbia, you have a very attractive incentive. You also have a powerful deterent, with sizable TAXES for polluting behavior.
The fact the Conservatives have endorsed the carrot and stick approach, which will impact industry, particularly domestic automakers, is a complete departure from all the rhetoric. Flaherty's announcement endorses the tenet of cost attached to pollution. This sort of initiative is exactly the kind of logic that environmentalists have long argued. It begs the question, if the Conservative endorse this philosophy as it relates to consumers, why all the resistence to the same approach with industry?