Ottawa should offer super tax credit to meet climate goals: report
|CTVnews 14 Jun 2019 at 14:28|
OTTAWA -- A government-struck expert panel is calling for new "super-deduction" tax credits to encourage Canadians to put their retirement savings into climate-conscious investments.
The report delivered Friday to Finance Minister Bill Morneau says the government should let people deduct from their incomes more than 100 per cent of any retirement contributions they put into investments such as bonds that help reduce greenhouse-gas emissions -- similar to regular contributions to registered retirement-savings funds but for extra credit.
To make this idea work, the panel called on the federal government to lay out a decades-long plan of needed investments and the cost of a carbon tax to hit Canada s national emission goals, so businesses and investors have predictability.
But with a federal election this fall, there is anything but the certainty to 2050 that the panel suggests.
The Liberals say they have no plan to raise the carbon-emissions tax beyond the $50 per tonne it is supposed to hit by 2022, up from the current $20-a-tonne levy in provinces that don t have their own carbon-pricing system. And the Opposition Conservatives have promised to kill the federal carbon tax if they re elected this fall.
The panel, led University of Toronto business-school dean Tiff Macklem, often heard during its work that "the more clarity the market can get ... the better that will be for investment," Macklem said.
Many of the investments the country would need to meet its carbon-reduction targets, from building infrastructure that can withstand more extreme weather to retrofitting buildings to be more energy-efficient, among others, will take years to plan and billions of dollars. More than the government can spend, the panel wrote.
Macklem, a former No. 2 at the Bank of Canada, said getting Canadians to put savings into green bonds, for instance, would help with their private finances, aid efforts to expand the green-financing market, and shift money toward the environmental effort.
Income-tax deductions would be an incentive for the many Canadians who don t max out their retirement-savings allowances and tax-free savings-account contributions, he said. Those who do should get extra space for green investments, he added.
"Finance is not going to solve climate change, but the things that are going to solve climate change - things like innovation, clean electricity, energy-saving buildings, climate-resilient infrastructure - those things all require investments," Macklem said. "In fact, they require a lot of investment and that s where finance is critical."
Andrea Moffat, vice-president of the Toronto-based Ivey Foundation, which supports work that combines environmentalism and economic growth, said letting people put their savings into green projects could solve several policy issues, including getting money into a clean-energy economy.
"This is what the panel report is sort of saying: Here are a bunch of things we need to do to actually get financing and investment going in the right direction so that Canadians can see they re going to have a vision for the future where we re a part of this larger, global low-carbon transition," said Moffat, who wasn t part of the panel.
The panel, which included a board member of the Royal Bank of Canada and top executives at the Quebec pension fund and the Ontario Teachers Pension Plan, proposed other regulatory changes to combine Canada s environmental goals and economic growth.
"(C)limate-change opportunity and risk management need to become business-as-usual in financial services, and embedded in everyday business decisions, products and services," the report said.