Dear Winnipeg

A Fun Blog About Infrastructure and Municipal Finance

Carbon Tax, Schmarbon Tax

Dear Winnipeg,

I hope you spent a great May long! Mine was really fun: the weather was finally nice enough that we were able to have neighbours and family over for a long-overdue barbecue.

And man, was it decadent! I mean, we really went all out and spoiled ourselves (and our guests!).

First, we served chips and salsa as an appetizer, which was a huge splurge for us, since salsa sells for about $4.65 per litre nowadays.

Then, we had salad, on which we poured ranch dressing. And I don’t know if you’re aware, but that stuff costs somewhere around $3.94 per litre. I know.

And like at any great party, we drank mugs upon mugs of beer. Yeah, even the real cheap stuff is still like $5.05 per litre. [But our guests are so worth it.]

Finally came the main course, which was slathered in BBQ sauce, at a wallet-splitting $5.81 per litre. [Hello? Richie Rich calling!]

Not to mention that before our guests arrived, we wanted to make sure they believed that we sometimes clean our house. So we cleaned our house, you know, just this once.

FYI, the toilet bowl cleaner alone set us back $4.92 per litre. [And you literally flush it down the toilet! How delightfully extravagant!]

We also wanted to fool our guests into thinking that our family adheres to basic hygiene principles, which meant showers for everyone! Don’t forget the shampoo at a lavish $13.70 per litre!

I get it, not everyone can afford such an elaborate evening with friends. It is very possible that my opulent lifestyle leaves me at a complete disconnect from the plight of the common man.

And so it is with that caveat in mind that I say this: I really don’t understand why people complain about the price of gas.

I mean, seriously, it costs Winnipeggers something like $1.21 per litre. And that already includes the $0.04 per litre carbon tax! That still makes it one of the cheapest liquids money can buy. Just look at this fancy graph I made:

Prices of various liquids per litre. Some items may appear to be duplicates, but they are not.

Let’s face it, even if you’re not a fancy moneybags who likes to indulge their friends with grand meals featuring pre-wrapped bacon and all the fanciest dijon ketchups, you have to admit that gas is C-H-E-A-P.

And basic economics tells us that when the price of something is low, demand for it will be high. So, cheap as gasoline is, it’s no wonder we overuse it as much as we do, driving our cars EVERY chance we get.

Unfortunately, as we’ve talked about before, that amount of car-use in Winnipeg has caused us to build three times more roads per capita than New York City. We can’t afford that much infrastructure, and that is bankrupting our fine city. It’s why everything is falling apart.

But if cheap gasoline encourages driving, could expensive gasoline encourage walking, biking and transit use?

Well, at first glance it would seem so… Europeans pay much more for gas than we do, and their mode share of walking, biking and transit use is much higher than ours.

Plus, basic economic theory tells us it should work. And that’s the idea behind the carbon tax: to make it more expensive to drive, so that people choose another mode of transportation instead.

The main goal of the carbon tax is to save the planet from a climate crisis, but even if you somehow don’t consider that a priority, you gotta admit that fewer people driving means less infrastructure for the city to pay for, which means property tax savings for you!

It also means fewer cars clogging up your commute, cleaner air, and not to mention, those people will be healthier for having walked or biked (that’s important since your taxes also pay for their healthcare here)! It’s win-win-win-win!

But, how do we know it will work?

Well, your cousin Philadelphia put in a soda tax on sugary drinks two years ago. The result? After adjusting for people who traveled outside the city to buy their pop, they measured a 38% reduction in pop sales. [Egad! It works!]

So if it works for pop, it’ll work for gas. Except for one thing: the Soda tax in Philadelphia is 1.5 cents per ounce, or about 50 cents per litre. That’s a far cry from the 4.4 cents per litre we have added to gasoline.

[I know I’m Mr. Monopoly over here, but 4.4 cents per litre seems downright affordable.]

So it’ll work, but with a tax rate that timid, we probably shouldn’t expect our results to be as dramatic. Luckily, we can look forward to the rate going up next year, moving us another small step towards more efficient infrastructure use and ultimately, municipal solvency!

Anyways, I’m off for a drive in my limo… if only I could remember where I left my Grey Poupon!


Elmwood Guy