I also thought that the Ontario Liberals said the new carbon tax would be revenue neutral.  I was challenged on that by another commenter and could not find any articles that say it would be.  Do you have a reference for Ontario Cap&Trade being touted as revenue-neutral?

You're quite right in pointing out the absurdity in the government's statement that revenue-neutrality would be achieved by new spending.  Revenue-neutrality means that new revenues collected by the government are offset by foregoing revenues from another source, not by spending that new revenue.  I don't see this government foregoing any current revenue streams at all.

Oh, and BTW, don't forget that the Federal government is reaping a windfall benefit from the Ontario carbon tax of roughly M$54 a year in GST charged on the carbon tax (StatsCan http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/trade37b-eng.htm and $20/ton carbon tax).  ON PST gets M$87.

Money for nothing.