Canada Plans "Free-bates"

This afternoon, Ottawa unveiled its budget. It's got several line items of note, including $5 billion for cities through an agreement to hand over some of the proceeds of federal gasoline taxes. It's also got $5 billion over five years for environmental programs, with an emphasis on complying with Kyoto. Creative components include a fund to help catalyze entrepreneurial greenhouse-gas reduction schemes.

To me, though, the most exciting announcement is an idea that was simply floated, not really included. Canada is still seriously considering adopting vehicle feebates, potentially one of the most powerful tax-shifts available. Word of this initiative came out last summer, as we noted at the time. But then everything went silent, and I got nervous. I needn't have worried. Apparently, government leaders had simply stolen into their top-secret policy laboratories and were performing the delicate operation of inserting an "r" into this innovative reform's name. Thus, not "feebates" but "freebates."

(I mock because I care. And I bet "freebates" will sell better than "feebates." Everyone wants something free; no one wants a fee. The tax shift itself remains unchanged: a fee charged to buyers of inefficient vehicles, a rebate paid the buyers of efficient vehicles. The size of the fees and rebates proportional to the efficiency of the vehicle. And the fees fully funding the rebates each year.)

The Globe and Mail reports

Within the budget, Ottawa also floated the notion of a vehicle "freebate" that would not only offer a rebate to consumers buying energy-efficient vehicles but also "impose a fee on fuel-inefficient vehicles."

"Over time, a freebate could contribute to the improvement of the fuel efficiency of vehicles purchased in Canada, reduced greenhouse gas emissions and improved air quality," Wednesday's budget said.

The government, the budget said, is now negotiating with the auto industry to strike an agreement that would improve the fuel efficiency of vehicles sold in Canada. Ottawa is also asking the National Round Table on the Environment and the Economy to develop options on a so-called freebate. No timeframe was given on the idea, which Ottawa said would be "revenue neutral" for the government.

UPDATE 2/24: Well, I looked for details in the budget itself and--wouldn't you know?--there's no extra "r" there. It seems the venerable Globe and Mail added the consonant. The budget itself just says "feebate." Ah well.