BC's Carbon Tax Shift

The best climate leadership comes from North Cascadia.

British Columbia rocks my world. With the release of the annual budget today, provincial officials just announced that they will levy a carbon tax to help drive down emissions. Even better, the carbon tax will be a tax shift—surely the best instance of tax shifting in the Northwest:

Finance Minister Carole Taylor vowed Tuesday that all money collected through the new tax will be returned through a package of tax cuts and credits.

Done correctly, the tax shift will send a clear price signal that discourages emissions, even while it promotes progressive tax policy. And what do you know?

Corporate and personal income tax rates will drop to help make the tax revenue neutral, and lower-income British Columbians will receive an annual climate action credit of $100 per adult and $30 per child.

In fairness, without futher details, we can’t know for sure whether the tax shift will adequately address questions of climate fairness. Still, it’s an awfully promising start.

Details of the plan:

Taylor said the new carbon tax will begin July 1, starting at a rate that will have drivers paying about an extra 2.4 cents per litre of gasoline at the pumps. The tax—which will apply to virtually all fossil fuels, including gasoline, diesel, natural gas, coal, propane and home heating fuel—will then increase each year after that until 2012, reaching a final price of about 7.2 cents per litre at the pumps. After that, Taylor said, it will rest with the government of the day to decide if the tax rate should change any further.

For non-metric Americans, this means…

…the tax rate will start at 9.1 cents per gallon and rise to 27.3 cents in 2012. Kind of expensive, right? But that’s the point: to discourage carbon pollution. And in any event, the money gets funneled right back to individuals and businesses.

Today’s announcement makes BC the clear leader in North American climate policy. No one else is even close. California, Oregon, and Washington are all waffling on much milder prescriptions. (Quebec also has a carbon tax, but it is very modest.)

For a variety of reasons, I think cap and trade is preferable to a carbon tax (though there are good points to be made on both sides of the issue). But BC is also participating in the Western Climate Initiative, which will soon propose a cap and trade program, and the two tactics aren’t mutually exclusive.

In fact, today’s carbon tax announcement is incredibly smart. It sets out a complementary emissions strategy that can be implemented now, not in several years. Depending on how the WCI plays out, the province can either phase out the tax or keep it alive. And by acting now, BC has better control over its emissions, so it stands to transition smoothly to a lower carbon economy.

Let’s remember too, that taxing oil—and getting ourselves off it—could turn out to be the cheapest thing we can do. Staying addicted is turning out to be incredibly expensive. In fact, today oil futures closed above $100 for the first time ever.

Post-script: My sources in Canada tell me that the announcement masks some perverse support for the oil and gas industries, and for new road building. Still, even those perennially-skeptical sources admit that this proposal is pretty darn great.

Post-script 2: Smart guy Marc Lee, an economist for the Canadian Centre for Policy Alternatives, has an excellent blog post up about the new tax shift. I’m told he also has a Vancouver Sun op-ed coming out tomorrow.

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  1. Alan Durning says:

    Have I died and gone to Cascadian heaven? Gordon Campbell told me many years ago that he’d do a tax shift in his second term. I didn’t believe him. But he was serious.Wow!We southern Cascadians stand and salute you, Mr. Campbell!Oh, and BC even got climate fairness right, by providing payments to low-income families to offset the regressivity of higher energy taxes.Again, wow! This is superb news.

  2. andrew says:

    Yes, this is great news, and we should all be full of joy and we should all hope that the rest of Canada and the US and the world follows (and does much more) but…This carbon tax will do little to really get people out of their cars because there are no transit improvements on the table until (at the earliest) 2013. Most people in Greater Vancouver, Greater Victoria and the Okanagan have little access to transit now and so have no choice but to drive (or stay home). Add to this the massive road projects that Eric mentioned in the post script and things only get worse.It is just very hard for me to understand the vast dichotomy in the Campbell administration. On the one hand, you have some serious climate initiatives that are coming out. But on the other hand you have serious road building and a love for a suburban kind of development. They desire to triple the size of the port (thereby bringing in 3x the number of dirty barges carrying questionable goods from China). They are seeking to remove vast swaths of land from the agricultural land reserve (and so far have been very successful). They also coddle the salmon farmers.What I am saying is: we should be happy today, but remember that there is still a long way to go.

  3. Kevin Connor says:

    I don’t think the dichotomy in the Campbell administration is so hard to understand. Except for the climate initiatives, everything you cite is what one expects from the Liberals, who, in BC’s polarized politics, will always be in big business’s pocket. The climate initiatives are the sign that it’s dawning on the free-market crowd that real science trumps their ideological dogma. Nonetheless, there’s lots of inertia to overcome, and so, many retrograde policies persist. (To be fair, road-building has been a favorite vote-buying tactic of all parties for 50 years or so.) What is surprising is that Campbell is proving to be one of the more pragmatic of his ilk. While there’s lots to criticize, he’s definitely pushing the envelope of what one can expect in pro-big business environmental policy, while also outstripping other putatively more progressive administrations (say, Manitoba under Doer) in introducing a carbon tax.As for Quebec, one can only hope that Campbell’s initiative will give the Charest administration, which is of a broadly similar stripe, an incentive to strengthen its carbon tax. However, the current minority government situation in the province likely works against any particularly bold initiatives.

  4. Donna Passmore says:

    Wow, you people are easily impressed. The carbon tax is going to fund loads of highway expansion here in BC. Campbell is still responsible for the largest highway expansion in Canadian history – this is NOT a green premier.

  5. Sunflowerrae says:

    This budget is all about PR. This is just another way for the BC Liberals to squeeze taxes from the people (giving the impression of being green doing it) while they do nothing to subsidize our expensive and ailing transit system. This budget contains huge subsidies for the oil, gas and mining companies with big plans for the port in Prince Rupert and major highway expansion between the BC coast and the Alberta tarsands. Shame on Gordon Campbell. He thinks he’s got everyone fooled.

  6. johmyn says:

    I live in BC.I am not impressed with this. Its a teaspoon of flavor for a zillion tons of pollution and woes.Traffic woes and`all the social costs`as a result of overuse of the automobile.People here will just drive across the border and fill up or they will stockpile on gas. In my opinion, insurance rates based on use need to be raised high.I use an electric bike and public transit.I have a 1991 Chev Spirit but to use it a few days a month I have to pay the same rate as daily users.Hit users in the pocket book but hit them hard for use. I would not apply this to people who need a vehicle for their trade or business where they have goods to haul.

  7. ethan says:

    I am thrilled that BC is taking this subject seriously. I am sad though that the first 20 people in my small southeast community in BC are all strongly opposed to this new action by their government. It strongly reinforces the view,in my mind with subsequent discussion, that Cap and Auction is really the direction we all should be putting into action instead of a carbon tax. BC is doing more than most but could be doing it far better!

  8. Nic S says:

    The BC Liberal Gov’t after having considered our particular situation vis a vis Climate Change, Peak Oil, etc, should be thanked for their efforts. Obviously they have put considerable thought into this green budget. This Carbon Tax is an excellent first effort and the fact that they came up with this initiative before anyone else is telling. Unfortunatly, this cure does not fit the seriousnes of the disease and does not address the reality of the worlds’ predicament today.The real situation will likely make many of these budget initiatives redundant in a relatively short time. I think the Sightline Institute is walking the fine political line between green politics in British Columbia and the rest of Cascadia in their praising of Premier Campbell’s Greenwashing Spin-Cycle. The fact that you are attempting to use Premier Campbell’s Green Spin to prod your Government to also do the right thing is a good strategy for you. But it also plays into the hands of Premier Campbell’s strategy of bringing favorable status to his desire for re-election in May of 2009. We all know how inadequate our various gov’s have been when it comes to dealing with climate change, peak oil and their insatiable greed in pleasing their supporters and themselves. We in British Columbia also know, despite the continuing praise of the Sightline Institute, that our Transit Systems in general are woefully inadequate and that yours in the USA are almost hopelessly so. The comparisons are very helpful. But helping BC elect another gov’t that only understands their own selfish wants and none of our societies needs is not appreciated in the least.

  9. spencerchinoy says:

    amen to that, Donna – you people need to understand the global tax scam. Study the woes Texans are havings with the Trans Texas Corridor, watch Endgame and wake up.

  10. Clark Williams-Derry says:

    Nic -I, too, wonder whether the carbon tax will be enough. In the short term I don’t think we’ll see a huge reduction in emissions; and the 2012 target is probably far below the price that’ll be necessary to reach 2050 goals. BC’s carbon tax is, at best, the opening gambit in a much longer process.Still, we’re not praising BC just to shame Washington and Oregon into taking a baby step in the same direction. We just, plain and simple, think this is a genuinely good proposal. Not perfect, not ideal; but still, quite possibly the best carbon pricing scheme, well, anywhere. And some of our colleagues in BC—folks we really respect—have a similar take. (See, e.g., CCPA’s take.) Obviously, there’s not unanimity on the issue, nor should there be. But at least we’re not alone in thinking that BC’s carbon tax is all in all a pretty good thing.I suppose, then, it comes down to this: should we give credit where credit is due? Or do we withhold the kudos, on the theory that, well, we disagree with the government on other issues, and thus shouldn’t give them any credit at all. If we took the latter tack—well, I suppose I’d never be able to say anything good, would I. So take me for a sunny optimist—I’m perfectly comfortable praising a bold step. In fact, I think that pointing out the good makes it easier to critique BC policies that are genuinely bad. (Like for instance—why won’t someone index the BC minimum wage to inflation? C’mon, Gordo—Washington and Oregon are doing it, you can too!)

  11. Mike says:

    Carbon tax is just a money grab. It won’t reduce emissions and if anyone thinks that they are deluded.CO2 should not be taxed. It is not destroying the environment, this whole global warming thing is a big scam. More Co2 = more plant life. Remember, plants breathe in CO2 and breathe out Oxygen. Less CO2 = less oxygen for us.

  12. Colleen says:

    How is this good? You have families already with out shelter and food as its a problem for many lower income in British Columbia. What should they do? BC Libs already endorse selling poor families the cities expired food which is going to leave many low income kids with Diabetes. What are they going to do when they can’t even afford the cities garbage? Wait 12 months for a rebate? Nuts! I have seen their diets and its, “Sugar in the morning, sugar in the evening, sugar at supper time”. Its what keeps on the shelfs. Taking these kids from their homes is not the answer and tearing them away from their moms because they don’t have the money to survive. Whats love got to do with it? Kids need it. One of the biggest offenders for putting children at risk is MEIA with 65% of kids taken from family on assistance with out food to eat and or shelter. Will they be giving thanks to the premier at the dinner table for building more highways they don’t drive on because most of these families can’t afford a car much less buy gas. How will they heat their homes? And now what they will not even be able to afford to eat the cities garbage. And maybe, just maybe it could be justified if the planet was being saved but alias its just more “Revenue” for business and government and nothing for the environment. Money talks and BC walks. Its very disconcerting.

  13. Martin says:

    Where can I find a copy of the British Columbia Regulations and this NEW Carbon Tax?Thank you

  14. Eric de Place says:

  15. Dwayne says:

    What a scam for you political crooks to get more money to steal from the tax payers so you can line your own pockets we know it goes on all the time and one day you get caught.But funny nothing ever seems to happen to you crooks because you always seem to hide the money some how.Please note that a rotting tree gives of more carbon then your average car.So go smoke another one.Your crooks and you dam well know it.Plus the gas price are already to high were been scammed there to and you do nothing about it so lets see who the crooks really are look in the mirror.

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