The Liberals have provided more detail on their carbon tax proposal (48-page pdf), and it has received generally positive reviews. The basic strategy is to take the existing gasoline tax, re-interpret it as a tax on carbon, and to extend it to other sources of greenhouse gases. As an exercise in electoral politics, introducing a carbon tax without increasing gasoline taxes is actually a pretty clever trick.
We also have a better idea of what the Liberals would do with the $15b or so in revenues that the carbon tax would generate: income tax cuts for the lower- and middle-income brackets, another point off the corporate tax, and targeted transfers for low-income households who wouldn't benefit from the income tax cuts. That's a pretty sensible list, although income tax cuts for those earning $100k/yr isn't exactly what I call a priority.
Reactions from the other two parties are continuations of their original talking points. For example, the Conservatives' theme of shrieking "Eeek! A tax!" has evolved into this. And the New Democrats are intent on showing to the world their singular inability - or refusal - to understand economics.
The standard NDP critique of the Liberal proposal takes two forms:
A) $10/kg (rising to $40/kg in four years) per tonne of CO2 is not enough to make a significant difference in ghg emissions, and
B) The Liberal plan will impose an unacceptably large cost on consumers.
The latter point is of course the CPC's position. And the NDP can fairly make point A) - except that according to this page, emitters will have to pay at least $35 per tonne of CO2 emissions. If an increase of $40/tonne is not enough to attain the announced policy goal, then the NDP's floor of $35/tonne is clearly too low; the appropriate price should be well north of $40/tonne. But if emitters are going to be paying significantly more under the NDP policy than they would under the Liberal plan, it makes no sense whatsoever to appeal to point B): there is no reason to think that emitters will try to pass along the costs of a carbon tax to consumers, but will not try to pass along the costs of an even more expensive carbon permit. The NDP is trying to suck and blow on this issue, but all it's doing is making unpleasantly incoherent noises. Cap-and-trade is not an indefensible policy (to a first approximation, cap-and-trade and carbon taxes are equivalent), and it will almost certainly be a part of the policy mix in the near future. But if the NDP wants to be taken seriously in this debate, it has to abandon the notion that its plan will not affect consumers, and it has to explain how it is going to protect consumers in low-income households.
My view is that a carbon tax is a good place to start, but it's not going to be the last word. If you're more concerned about hitting the emissions targets than you are about price uncertainty, then cap-and-trade is the best way to go. And it seems clear that this will be a good description of our priorities in the not-too-distant future.
But we're not there yet. Right now, there are a lot of people who are worried about the effects of climate change policy on prices and about the potential for economic dislocations; a radical cut in emissions runs the risk of generating severe economic disruptions and wiping out electoral support for climate change policy for a generation or more.
As far as revenues go, the Liberal plan amounts to rescinding the Conservatives' 2 ppt cut in the GST. Not insignificant, but not particularly profound, either. Once it's been demonstrated that a carbon tax does not mean the end of the world, then there will be less electoral opposition to climate change policies. And as we learn more about the relationships between ghg emissions and prices, we can start introducing cap-and-trade measures with more confidence.