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Greater Niagara Chamber of Commerce

Go outside the box with tax system

Ontario’s cap and trade program went into effect on Jan. 1.

At Greater Niagara Chamber of Commerce, we recognize the importance of fighting climate change and passing on a habitable planet to our children, and we acknowledge that costs for some services will have to rise.

What we don’t accept are policies conceived and implemented in isolation, without balancing incentives to businesses that would stimulate growth and investment.

At an age of extreme globalization, rapidly changing job markets and major deficits, debts or budgetary problems at all levels of government, we need to be innovative in addressing issues. We need policies that combine ideas, reflecting that when one hand imposes burdens, the other has to give back in order to protect the long-term viability of businesses.

The timing of cap and trade is unfortunate, coming alongside skyrocketing hydro bills and rising costs for housing, food and fuel.

This is one more in a series of increases. At GNCC, we have spent a great deal of time on these pressing issues. We’ve met with all three major political parties and talked over policy alternatives, right up to the Premier. We’ve had long conversations with ministry officials to understand these changes and to try and help reduce the impact on our members.

We have worked with the Ontario Chamber of Commerce (OCC), including co-publishing reports and policy papers on cost reduction and future plans. We worked together on the Small Business: Too Big to Ignore campaign, which identified electricity prices as a key issue for small business and did a lot to bring the issue to the attention of government.

We also worked with the OCC on a survey to assess the impact of cap and trade, and Ontario climate policy in general. Back in July 2016, we performed a thorough assessment of the cap and trade program and its impacts, and published it on our blog in plain language. There’ll be a future series on electricity prices.

Climate change is real, and we need to get a handle on it. Niagara’s farmers and vintners are already feeling the effects. Our food prices are rising because of it. Decisive action is called for.

However, we can’t deal with this problem in a bubble. Climate change, unemployment, poverty, the economy, education, health care and all our other issues are linked together in ways which cannot be undone, and government policy makers must look outside their silos and consider the entire system.

In light of that, government must consider how policies like cap and trade will impact businesses, family budgets, unemployment and so on. Additional costs must be balanced against relief elsewhere. Changes should be gradual and predictable, not sudden.

Today’s problems are too big for partisanship. If we are to overcome them, our political parties must work together to find solutions. Businesses, like the public, are looking for reasonable alternatives and co-operation.

Economists argue that there is little practical difference between a carbon tax approach and a cap and trade one, with more differences within than between. We have to do something about climate change — just as we know we can’t keep burning coal, but we also can’t pay coal prices for green energy. If there’s no wiggle room here, however, the government has to create it somewhere else and give Ontarians some relief.

Perhaps it could be through grandfathering existing emissions so that businesses don’t incur new costs for their existing operations under cap and trade. HST relief or reduction is a possibility, particularly for low-income households, to put more money in their pockets so they can pay their bills and support local employers. We could consider purchasing more hydro power from Quebec.

There are opportunities for the federal government to provide relief elsewhere as well. In our consultations with MPs for Budget 2017, we recommended measures that would reduce the cost of doing business and increase employment, such as an EI “holiday” for new employees and further cuts to the small business tax rate. These federal policies would give our local businesses relief to meet higher provincial costs.

In an effort to make our future viable for all, we need a tax system that specifically incentivizes the things we want — investment, growth, competitive advantages, work and hiring — and reduces the things we don’t: carbon emissions, overregulation, unfair penalties.

We need dynamic policies that can strengthen us and unleash accelerated entrepreneurship, innovation and global trade, and we must be prepared to go outside the box for them.

— Mishka Balsom is CEO and president of Greater Niagara Chamber of Commerce.

Originally appeared in the St. Catharines Standard:

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