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The Econo Miss

by Archives November 27, 2007

Car emissions account for about 12 per cent of Canada’s total greenhouse emissions. In an effort to curb this output, the federal government is trying to implement some changes through a combination of regulations, incentives and the less impressive feebate system.
Ottawa has three options to encourage drivers to reduce their reliance on gas guzzlers and old vehicles that are notorious polluters. Subsidies for fuel-efficient cars can be given to either the individual or the car manufacturer. Most economists, however, support market-based incentives such as taxes on either gas at the pump, or a carbon tax. The feebate system provides both manufacturers and individuals with incentive by taxing fuel inefficiency and subsidizing fuel efficiency.
Only ten models of cars and nine models of trucks are eligible for rebates during the 2006 to 2007 year. That means few Canadian drivers own cars or trucks today that are considered fuel efficient. The rest are taxed for fuel inefficiency.
This may seem like incentive enough for consumers to buy a fuel efficient car; but the starting tax is only $75. When someone is buying a car in the tens of thousands, it is insignificant. About 90 per cent of cars sold in Ontario fall under the $75 tax.
About 43 per cent of cars built 15 years ago are still on the road today and they require more gas per kilometre than their newer counterparts. A new car produces about 98 per cent fewer emissions than a car built in 1992 and is more environmentally friendly, even if it doesn’t fall under the feebate program.
Critics of Ottawa’s feebate program say it is targeting already fuel-efficient cars. A more reasonable approach would be to encourage drivers to dump their old cars in favour of newer models or use alternative sources of fuel. The program has also come under criticism because off-shore manufacturers can also benefit from taxpayer assistance, providing they produce a fuel-efficient car.

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