Green party unveils national carbon tax plan with gas levy

Canadians would pay a steep price for carbon pollution, including at the gasoline pumps, but receive income tax breaks to counter the costs under an environmental plan released Wednesday by Green party Leader Elizabeth May.

The policy would tax carbon dioxide emissions at $50 a tonne, then redirect the $40 billion collected into income-tax reductions. Canadians could reduce the amount they pay in taxes by being more energy efficient, May said.

"It puts you in control of how much tax you pay and not Mr. Harper," May said about the revenue-neutral plan.

She called it a "modern Robin Hood approach" to solving the climate crisis.

To help offset the carbon taxes, the plan would cut income and payroll taxes, introduce income splitting, increase support to low-income families and others most affected by the levy.

As an example, the Green party release says, an urban, middle-class B.C. family earning $65,000 a year would pay $1,274 in carbon taxes for electricity, gasoline and home heating, but would see $1,101 in reductions in other taxes, such as payroll, for a total increase of  $173 or 0.3 per cent.

The amount of taxes paid could be reduced by taking environmentally friendly steps such as switching to a more fuel-efficient car, the party said.

12-cent gas tax proposed

An upper middle-class family in Ontario would pay 1.2 per cent less income tax, while a low income rural senior would save 9.2 per cent every year, the party said.

The proposal also includes raising gas prices for drivers by 12 cents per litre at the pumps and electricity from coal by three cents per kilowatt hour.

A large chunk of the revenue collected through the carbon tax, though, would come from the largest polluters, such as oilsands companies.

Under the plan, as the amount of carbon available to be taxed falls, the price per tonne would rise.

The party says the $50/tonne carbon tax would marginally improve Canada's gross domestic product (GDP) growth, citing a report to Environment Minister John Baird that was made public through access-to-information requests.

The party points to other countries that have successfully implemented a carbon tax, including Norway, Denmark and Sweden.

Liberal Leader Stéphane Dion plans to unroll a similar plan Thursday, but at a lower rate since it doesn't include a new tax on gasoline for vehicles.

May said she did not "attempt to upstage" her ally Dion by announcing a bolder carbon tax plan the day before the Liberals.