Angry in the Great White North

Liberal Party leader Stephane Dion wants Canadians to pay for being responsible for 2% of the world's greenhouse gas emissions.  The punishment is a carbon tax that is supposed to encourage use to emit less greenhouse gases:

Over the summer, Liberal Leader Stephane Dion will be criss-crossing the country, telling Canadians already reeling from higher gas prices that they need to pay a lot more for the rest of their energy sources. His message, in essence, is that it's time for Canadians to put their money where their mouths are if they are serious about saving the planet.

No one thinks it will be an easy sell, but Dion seems determined, even eager, to take on the task. In fact, he's staking the Liberals' chances in the next election – not to mention his own political future – on this risky strategy.

Generating perhaps $12 billion a year in extra revenue for Ottawa, it would mean much higher costs for homeowners who heat with natural gas, heating oil or electricity from coal-fired plants. (The price of gasoline, already subject to a federal excise tax, would not rise with the proposed levy, Liberals maintain.)

It's a no-brainer to conclude that such a tax will blast property values.  Anyone who has bought or sold a home knows just how important the energy bill is when determining a fair selling price.  If the cost to heat a home goes up dramatically (as even the pro-Liberal Toronto Star admits will happen), the house market will dive.

What can you do?  Let's hope you have money saved up.  Borrowing against the value of your home will be difficult if the value of your home is significantly less.  But assuming you can get a hold of the money, you can invest in insulation.

Well, more insulation.

Actually, I'm not sure what that will do, since all modern homes are well insulated already. 

I guess there isn't much you can do, except pay the carbon tax.  Or move into an apartment.

But as the Liberals say, they'll be returning the money in tax breaks.  Low income earners will be targeted for the best breaks.  Are you a low income earner?  Not likely if you are a homeowner.  Oh well.

Still, an across the board income tax break can take some of the sting out of watching the value of your home waste away. 

Taxes going down is a good thing.  But will all taxes go down?

Since we're talking about homes, what about property taxes?  You know, the taxes that pay for the street lights and traffic signals and municipal works trucks and all those other energy intensive systems that make cities run?

Municipalities will be hit hard by the carbon tax.  Local city councils will have no choice but to raise property taxes.  High property taxes means lower housing values too.

Really, who would want to buy a house in a carbon tax environment?  Who could afford to?

In fact, when you think about it, implementing a carbon tax plan that will inevitably suppress the housing market could be considered a really bad thing.  How much of the money in the economy is ultimately underwritten by mortgage papers held by the major banks?  I'm not an economist, but if housing prices take a major beating (hit by the twin punches of much higher energy costs and increased property taxes), doesn't the economy as a whole shrink?  Some of the carbon tax money gets returned in tax breaks, but really, that just gets sucked back up into paying for the artificially increased energy bills.  Essentially, the carbon tax does not take greenhouse gases out of the atmosphere, but takes money out of the economy, trapped in a cycle of tax breaks being used to pay for increased energy bills that pay for the next round of tax breaks that will pay for increased energy bills.  So a bunch of money disappears from the economy, devalued real estate further constricts the ability of banks to loan money as a means to generate economic growth, and greenhouse gases continue to be emitted (with likely no effect whatsoever on climate).

Brilliant.