British Columbia implements carbon dioxide tax in its 2008 budget
The Canadian province of British Columbia has just released its latest provincial budget. Amongst plans for a variety of spending initiatives was the commitment to become the first North American jurisdiction to implement a "consumer-based carbon (dioxide) tax."
The plan for the tax is to make it revenue neutral, meaning British Columbians will be paying out for the tax at the same time as the Ministry of Finance is cutting cheques to citizens to make up for the added expenses. BC Finance Minister,
(Carole) Taylor pledged to issue a $100 cheque to every person in the
province in the weeks leading up to the July 1 launch of the carbon
tax, which will begin at $10 per tonne of fossil fuel-fired greenhouse
gas production. That amounts to 2.4 cents per litre of gasoline and 50
cents per gigajoule of natural gas, amounts that will triple over the
next five years as the carbon tax grows to $30 a tonne.By then,
the owner of a gas-loving pickup truck who drives 40,000 kilometres a
year will see a fat $500 added to his annual fuel bill.Emissions
from landfills and agriculture — as well as from makers of oil, gas,
aluminum and cement — will not be taxed. Together, those emissions
make up 30% of the province’s carbon footprint — although some may be
covered in a cap-and-trade system expected to be unveiled late this
summer.
The plan is to move consumer decisions — over time and as the tax increases — away from more "carbon-intensive" fuels and less efficient vehicles.
Reviews of the tax are both laudatory and stinging, and, as one would expect, are divided along traditional lines. Environmentalists, who will largely avoid the costs associated with the tax, are gleeful at the prospect of government mandating winners and losers in the energy game. Industry and those who will bear the lion’s share of the increased costs are suggesting that the government’s plans ignore early moves by business to cut emissions, are short-sighted, and will end up doing more damage than good.
Overall, the government estimates the carbon tax will bring in
revenues of about $1.85 billion over the first three years — all of
which it says will be returned to businesses and individuals.Estimates
suggest businesses will pay two thirds of the carbon tax, and will
receive only one third of the refunds. By contrast, individuals are
expected to pay one third, while receiving two thirds of the credits.The move was seen as a huge win by environmentalists, who depicted B.C. as a leader in taking action on climate change.
"I
think this is a landmark decision in North America as far as government
addressing global warming," said Ian Bruce of the Suzuki Foundation."The
B.C. government has decided to use one of the most powerful incentives
at its disposal to reduce pollution," he added, saying he expects the
move to help spur innovation.Lisa Matthaus of Sierra Club B.C. agreed.
"This
is the budget that is going to support the significant throne speech
commitments from last year, in particular the carbon tax."Not everyone was equally supportive.
"I
think they were pretty quick to pull out the stick when it comes to
accomplishing environmental objectives," said Laura Jones,
vice-president at the Canadian Federation of Independent Business."We
know from our surveys that over 80 per cent of business owners are
already taking action to get cleaner," she added, saying that is
happening without a tax in place."I don’t think this is the best
way to accomplish the goal of getting more environmentally friendly,"
she said, explaining she would rather have seen a greater focus on
education and incentives.Niels Veldhuis of the Fraser Institute also took issue with the plan.
"This was a lost opportunity for British Columbia in terms of improving the investment climate," he said.
"We
had a real and historic opportunity to improve our investment climate,
to ensure our prosperity going forward by aggressively reducing
business taxes and personal taxes."For example top earners in B.C. pay taxes almost 50 per cent higher than their counterparts in Alberta, he said.
Instead of reducing taxes they chose to "change the mix," he said.
Time will tell whether BC becomes a North American green mecca, or if British Columbia business (as it did in the mid to late 90s) will begin another exodus away from higher taxes and increased regulation to more business friendly climates.
Update (3-1-08): Lorrie Goldstein — obviously no fan of the move to mandate carbon dioxide limits — pulls no punches in his Toronto Sun review of British Columbia’s decision to implement the tax, arguing that "Only a politician would try and sell you on the idea that more taxes can save the planet"
There was a time that when politicians raised taxes, they called it what it was: Raising taxes.
They didn’t, at least not with a straight face, make grandiose claims
that raising taxes was all part of their plan to save the planet and
kickstart a "social movement" into being.But that was before green fever madness gripped our politicians.
It was in the throes of that condition last week that B.C. Finance
Minister Carole Taylor actually claimed, with a straight face, that her
province’s imposition of Canada’s first carbon tax (a tax on fossil
fuels) could be the start of a new "social movement" across the
country.