Let me first of all say that this kind of proposal really was made ten years ago by the technical committee on business taxation, which I chaired. I was appointed by Paul Martin when he was Minister of Finance.
In fact, we recommended taking the federal fuel excise tax, which really lost its rationale.... It was introduced in 1975 to reduce imports of oil. That's really irrelevant today. There's a question of why it even exists at the federal level, since the federal government really doesn't fund highways and roads, as the provinces do, and one could argue that it's a user-related tax. Can't the federal government do something better with that tax? We recommended at that time a broadening of the federal fuel excise tax into a tax either on energy or on toxins. It would effectively take into account these things.
Today I presented a paper and gave a speech at the Economic Club of Toronto. In that presentation Nancy Olewiler and I developed in more detail some of these arguments, taking up the report's recommendation from ten years ago. We looked at what would happen if you kept the gasoline tax at 10¢ and then decided to apply a broad-based environmental tax on other fuels. It could be on carbon; it could be on sulphur and NOXs or on some combination of these things. That's a choice that could be made, but we worked through the carbon case because it actually was easiest in terms of the data.
A tax of 10¢ a litre, which is currently existing under the federal excise tax, is equivalent to a carbon tax of $42 per tonne. If you apply $42 on everything else, what would happen in our calculations is that instead of raising $5.1 billion under the federal fuel excise tax, one could raise $17 billion under a full-blown carbon tax that would be based on consumption. In other words, you try to exempt exports and tax imports, although there's a very significant problem in trying to do that beyond the fuel combustion stage.
The reason is that if you bring in a toy from China, it may not just include lead; it will include carbon, but it may not be carbon in China, because it could have been assembled from components produced all over the world, including the United States and Canada. Then you want to know the price of carbon in all different parts of the world in measuring that carbon and everything else. Putting tariffs on manufactured goods would really be quite a challenge, but as we've seen with the B.C. carbon tax, it is possible to consider that.
I think there is some room at the federal level to take a restructuring of the existing federal excise tax and maybe use it for a better purpose than simply grabbing revenue.