Pitch perhaps ahead of itself

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Considering how much people gripe about the price of fuel now, the IMF will have a tough sell on its proposal to drastically hike energy taxes.

There is a tradeoff, however, in that the International Money Fund says such a hike should be accompanied by a cut to tax on income and other forms of capital. The U.S.-based financial institution claims such an overhaul of the tax system – with taxes on energy funding social programs – would not only improve the environment but also the economy.

The tax, it recommends, would be on coal, gas, motor diesel and natural gas.

Fuel destined for home heating – now there’s another concern, and any inclusion of that would be a no-go. Canada didn’t choose to be placed high up in the northern hemisphere. You don’t have the option of not heating your home the way you can take your bike, rather than the car, to the corner store.

Although these figures are recommended for the U.S., they should give an indication of what the IMF has in mind: a tax on gas equivalent to about $US0.55 a litre instead of the current 36 cents. In Canada it would be about a 52 per cent increase in the tax level.

No need to fret over this yet, since the federal Conservatives reject such an approach.

The skeptics among us would want to see that drastically lowered income tax and business tax before entertaining such a notion – revenue-neutral in other words. But even then, a lot of us are suspicious – justifiably so – when it comes to governments and tax policy.

The IMF is aware of that, and says for such a structure to work, governments would have to lower other taxes proportionately before raising gas taxes.

It would certainly have the effect of making people more judicious about their driving habits and any other actions involving energy consumption. It could have a positive effect in many areas, such as health and environment.

It’s not likely to happen anytime soon. But you never know what forces could make this more palatable in the future.

Organizations: IMF, Conservatives

Geographic location: U.S., Canada

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