In the discussion over “pausing” the excise tax on gasoline and diesel, and the Conservatives’ demands that all other fuel charges be scrapped (including the clean fuel standard which is not a charge or a tax), versus the NDP’s call for a price cap and windfall tax, there hasn’t been a lot of discussion about what those will mean.
Enter economist Kevin Milligan, who has a good thread explaining the problem with windfall taxes, and why those advocating for them have a lot more explaining to do when it comes to just how they see them being implemented.
Adam asks a fair question here that has been bandied about. Let me offer two arguments against a windfall tax that I would wager FIN officials would make when advising cabinet on what to do. I'll also offer my own assessment of the two arguments.1/
— Kevin Milligan (@kevinmilligan.bsky.social) 2026-04-15T15:15:37.601Z
Why would FIN argue against an oil/gas windfall tax?FIN Arg #1: Ideally we set taxes in advance and then let firms and people make their choices based on those taxes. Changing taxes <i>ex post</i> risks upsetting investors who would view this as a mark of an unstable unserious country.
— Kevin Milligan (@kevinmilligan.bsky.social) 2026-04-15T15:17:39.157Z
My response: Yes, ideally we set taxes ex ante and let firms/people decide what to do. Changing that ex post is like reneging. All true. But I do think FIN overindexes on this argument. Every time we change taxes we literally 'renege' on the status quo./3
— Kevin Milligan (@kevinmilligan.bsky.social) 2026-04-15T15:19:52.099Z
If you took the 'no tax changes ex post' argument completely as sacrosanct, it essentially argues for no tax changes ever. That's silly.I also note the "no ex post changes because we're not a banana republic" argument only gets hauled out when it's a tax *increase*. Why not symmetric? Hmmm…/4
— Kevin Milligan (@kevinmilligan.bsky.social) 2026-04-15T15:21:48.449Z
Why would FIN argue against an oil/gas windfall tax?FIN Arg #2: How do you define a "windfall"? What is this year's profit? What is last year's profit? You realize these are accounting numbers, subject to lots of choice variables for shifting between tax years, right? /5
— Kevin Milligan (@kevinmilligan.bsky.social) 2026-04-15T15:24:09.737Z
Fin Arg #2 cont'd: The concern is that you'd end up with a lot of accounting gaming and not as much revenue as you'd think. A lot of time/effort/dollars spent on creating the tax law to minimize gaming. A lot of time/effort/dollars spent by firms avoiding a windfall tax law./6
— Kevin Milligan (@kevinmilligan.bsky.social) 2026-04-15T15:25:51.216Z
My take on accounting and windfall taxes:I recall reading historical precedents around WW2 (?) that outlined how much effort it was relative to the revenue. I recall that being persuasive. (Don't have the source at my fingertips….)But I take the windfall tax accounting issue seriously./7
— Kevin Milligan (@kevinmilligan.bsky.social) 2026-04-15T15:28:08.463Z
So, my advice to those who advocate for a windfall tax? The thing you could do to overcome government resistance is to look seriously at the accounting issues involved.Chanting slogans is one thing. Overcoming implementation barriers is maybe less fun, but necessary to gettin stuff done./end
— Kevin Milligan (@kevinmilligan.bsky.social) 2026-04-15T15:31:43.152Z
It only boils down to 'let the rich have their way' if you assume that windfall tax advocates aren't capable of getting their accounting shit together. Why be so defeatist?I outlined a path for advocates. If the response is 'gee that sounds hard' that's not my prob.bsky.app/profile/open…
— Kevin Milligan (@kevinmilligan.bsky.social) 2026-04-15T15:40:14.904Z
I'm not here to blow sunshine and tell you that hard things are easy. Hard things are hard. If you're determined you can do them. But if you don't want to do the work then I'm not going to take the proposal seriously.
— Kevin Milligan (@kevinmilligan.bsky.social) 2026-04-15T15:42:31.333Z
It’s clear that Avi Lewis hasn’t actually thought any of this through. He was on Power & Politics last night and kept trying to handwave away the questions about this plan, and it just kept boiling down to “oil companies bad.” I do think it’s a problem that we’re not seizing on this opportunity to make long-term investments to get off of our dependence on fossil fuels like the French did with their transition to nuclear in the seventies and eighties (because so much European power relied on Middle Eastern fossil fuels up until the oil embargo in the seventies), but nobody seems to want to have that conversation, and Carney has been pretty adamant that he thinks there is a future in the fossil fuel sector. It’s too bad we have no grown-ups who can have a serious conversation about this.
Ukraine Dispatch
Russia fired missiles into Kyiv early this morning, killing thirteen so far including twelve-year-old child and wounding several others. This was after more missile and drone attacks were made through the day, which included hitting an apartment building in Odesa. Ukraine’s army has been introducing new drone infantry capabilities, which has resulted in retaking more territory from Russian occupation.