Will BC Elections Turn on Carbon Tax Shift?

Disheartening distortions from the New Democrats.

Carole James BC's NDPLast week, BC’s New Democratic Party put a misleading attack on the province’s world-leading carbon tax shift at the center of its long-shot campaign to regain control of the province’s government in the May 12 elections. The campaign officially kicked off today.

As I said in October, I hope this argument won’t work.  The NDP—a party Sightline proudly advised and collaborated with during its last term in power—is playing fast and loose with the facts. Some people I respect in the province are steaming mad. Here’s BC conservation advocate Tzeporah Berman in today’s Globe and Mail: “There is no question that environmentalists should be punishing the NDP for their regressive position on climate change. . . . Many environmentalists, like me, feel betrayed by Carole James.” Berman campaigned for the NDP four years ago. Why the enmity?

Because the NDP has taken aim at what is perhaps the single most progressive and environmentally responsible climate policy in the province—and one of the best in the world. The first specific complaint the party  platform levels against the governing Liberal Party’s policies (on page 3) is the assertion that they “increase taxes for average families by tripling the gas tax.” This claim is demonstrably false, as I’ll show.

“Gas tax?!” Hmmph. NDP leaders surely understand that BC’s climate policy is a carbon tax, not a “gas tax.” A carbon tax covers gasoline, it’s true, along with all other fossil fuels. A gas tax only covers gasoline. By the NDP’s logic, a retail sales tax would also be a gas tax if it covered gasoline (along with other things). The party is using “gas tax” to unfairly incite voters to opposea a smart policy.

In fact, the first legislative priority listed in the platform—also given pride of place in party leader Carole James’s op-ed in today’s Vancouver Sun–is to scrap the carbon tax shift: “Gordon Campbell’s gas tax is unfair and it doesn’t work. Working people pay, while big polluters are let off the hook and greenhouse gas emissions continue to rise. The NDP will scrap the tax.”  .

Let’s pull that apart:

“Gordon Campbell’s [carbon] tax is unfair.”

No, it isn’t. The carbon tax policy, which includes legally mandated income tax credits and income tax rate reductions, is economically fair. The net effect is to raise after-tax income for the vast majority of low-income and middle-income families in the province. That’s the conclusion of economists Marc Lee of the Canadian Centre for Policy Alternatives and Toby Sanger of the Canadian Union of Public Employees—two organizations ideologically aligned with the NDP. They did the best analysis of the tax shift’s fairness. The only substantial fault they found with the fairness of the carbon tax shift is that, in a few years, as the tax rate on carbon rises, the tax credit for low-income families will need to rise, too. Marc Lee told The Tyeehe supports the carbon tax shift, especially if it’s adjusted in future years.

“It doesn’t work.”

Yes, it does. Mark Jaccard—perhaps Canada’s leading expert on climate policy, a professor at Simon Fraser University, and a repeat appointee to policy-making posts in past NDP governments—just published an analysis of the NDP’s critique of the carbon tax shift and the NDP’s own alternate plan. He concludes unequivocally that the carbon tax shift does “work.” By raising prices gradually, it encourages everyone in the province to squeeze carbon out of the energy system. It stems emissions far better and more cost effectively than anything the NDP has proposed to do.

“Big polluters are let off the hook.”

Big polluters? They pay the carbon tax the same as everyone else. No carbon tax or cap- and-trade system anywhere in the world is more comprehensive in its approach to climate-disrupting gases. I repeat: it is THE best carbon tax in its design, bar none. It treats virtually every user of fossil fuels in the province equally, whether they’re businesses or families. In fact, in design (although not yet in tax rate) BC’s carbon tax is better than the carbon taxes in the social-democratic countries of northern Europe to which the NDP often looks for inspiration. Gordon Campbell’s carbon tax is more comprehensive and uniform than Norway’s carbon tax. It’s better than Denmark’s. It’s better than Sweden’s.

Yes, the BC carbon tax does not yet extend to some businesses that emit certain minor greenhouse gases—compounds other than carbon dioxide. But that’s a practical problem of pollution measurement and tax administration, not policy design, and the province’s policy is as good as any climate pricing system in place anywhere else in the world in covering these pollutants. A year ago, what’s more, British Columbia committed to adding these pollutants to the tax base as doing so becomes practical.

Elsewhere, the New Democrats have claimed the carbon tax shift runs roughshod over rural families, playing into fears in the province’s north. It does not: it’s even-handed between rural and urban areas. Nic Rivers, a PhD candidate at Simon Fraser University, analyzed energy use in metropolitan and small town British Columbia. He found the impacts of the carbon tax on household budgets to vary little with geography. The colder climate in the province’s north, for example, increases home heating energy use there, compared to metro Vancouver. But the difference is so small that the monthly effect of the carbon tax amounted to less than $1 a month last year. (Mr. Rivers published his analysis in the April 29, 2008 Vancouver Sun. His column doesn’t seem to be online.)

The New Democrats claim that they care about curbing climate change: they say they will replace the carbon tax shift with a cap-and-trade system that only covers big, industrial companies. Of course, the Campbell government has already legislated the province’s participation in the Western Climate Initiative—the largest cap-and-trade system in development in North America. As we’ve argued, doing both the tax shift and cap and trade is better than doing either separately. Mark Jaccard’s academic analysis of this NDP alternative concludes that the NDP cannot achieve the quick emissions reductions they promise by targeting only the roughly one-third of climate-disrupting pollution that flows from heavy industry in the province. Or, more accurately, the NDP can only hit its emissions goals from industry alone by essentially shutting down a chunk of the province’s manufacturing base that employs 60,000 people.

If the New Democrats want to contest Gordon Campbell’s climate-change policy credentials, they have plenty of legitimate arguments at their disposal: the Liberals’ support for expanding the oil and gas industry, for twinning the Port Mann Bridge, and for the highway-expanding megaproject Gateway. Instead, they have systematically misrepresented the facts, doing a disservice to the province’s voters, not to mention the global quest for systemic solutions to the climate crisis.

I had hoped that the New Democrats would let last year’s overblown criticisms of the carbon tax shift fade into the background during the election. After all, energy prices have dropped and the economic crisis is now the main public concern. Instead, the party appears to be making its carbon-tax distortions a centerpiece of its campaign strategy. That’s more than disheartening. It’s deceptive and cynical. As the science of climate change looks ever more dire, it also appears downright dangerous.

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Comments

  1. Mark Crawford says:

    “Disheartening” is a good word to describe it, since I know darned well that the NDP has deeper roots in the environmental movement than the Liberals do, and that environmentalists have generally been more influential within the party than they have within the Liberal Party. At least, until the Carbon tax issue came along. They could have come up with a different approach to taxation (floor price is an example) along with a broader panoply of regulatory policies. Going after heavy industry only gets at half the problem—or, more accurately, one-third of the problem, as you point out. See my blog on this point last October: http://markcrawford.blogspot.com/2008/10/re-carbon-taxes-including-ones-on.html

  2. Milan says:

    The NDP stance is very disappointing.It is now extremely clear that global emissions need to fall – both in times of economic strength and weakness. Those in economies with excessive per-capita emissions need to fall soonest and fastest, and Canada has an appalling record in that regard. Cutting emissions in an economically efficient way means establishing a national price for carbon: either through a cap-and-trade scheme or a carbon tax. As such, parties that support a Canadian climate policy that is effective and internationally responsible would do well to either make such a proposal or support one already advanced by another federal party. Jack Layton may be more concerned with social welfare than with the environment, but he really needs to realize that failing to deal with climate change will produce enormous amounts of suffering and that those who will be hardest hit will be the poorest and most vulnerable in Canada, and around the world.

  3. Rod Smelser says:

    This essay relies almost exclusively on inputs from Prof Mark Jaccard of SFU, and his associate Nic Rivers. It claims, accurately, that Jaccard was once an adviser to the NDP Govts of Mike Harcourt and Glen Clark. He was head of the BC Utilities Commission at one point. But so what?What is left out is the fact that Jaccard was extremely annoyed that Premier Glen Clark did not accept Jaccard’s recommendation that BC Hydro seek most of its additional supplies of power from independent (read privately owned) power producers, especially those doing run-of-the-river developments. Clark instead wanted to put a natural gas fired thermal plant on Vancouver Island, a project which has since been cancelled. Jaccard may have been right that the natural gas plant was a bust, but the various run of the river projects in BC right now, including those promoted by Tzeporah Berman and her PowerUp group, include many large scale projects that would have a fisheries and recreational impact. Some will require three kilometre penstocks drilled through solid rock. California has refused to recognaize these ROR projects as being green because of their scale.

  4. Alan Durning says:

    Marc Lee critiques the climate policies of both the New Democrats and the Liberals in recent posts.

  5. Colin McKerracher says:

    The issues of independent power production and the carbon tax have received a lot of press coverage so far in this campaign. However, one area that is equally important for any serious discussion of environmental impact, and has been largely left off the table, is the modernization of our electrical grid. As somebody closely involved in this industry I’m extremely disappointed that the NDP has chosen to scrap the entire smart grid program in favour of “expanding conservation programs”. From an environmental point of view smart meters are a key element in enabling things like electric vehicles, voluntary demand response, provision of real-time consumption feedback, and distributed power generation such as small scale solar. From a financial standpoint they allow the utility to operate a significantly more efficient grid, detect outages and theft, and remotely read meters. As much as many people don’t like to admit it, BC imports power during peak times from neighboring grids in Alberta and Washington. This electricity contains a much higher CO2 emissions intensity factor than our own power. Conservation and grid efficiency are very important if we ever want to reduce this dependency. Programs such as PowerSmart, while admirable in their goals, have only managed to enroll about 70,00 people, or 1.5% of the population, at relatively high cost. I’m not sure what types of conservation programs the NDP plans to expand, but if its more of the same, I think it simply wont work. The smart grid has been recognized in other parts of Canada and internationally as the best way to achieve real reductions in electricity consumption and greater grid efficiency. Its a shame to see the NDP throw out such an important part of the fight against climate change.

  6. Alan Durning says:

    Colin,I agree completely. It’s mystifying why the NDP would scrap this program.

  7. Jerry West says:

    Quote: the NDP has taken aim at what is perhaps the single most progressive and environmentally responsible climate policy in the province—and one of the best in the world. UnquoteActually the carbon tax enacted by the BC Government is neither progressive nor environmentally responsible, and if it is the best in the world, then the world hasn’t even began to address the problem.The tax is a scam meant to fool people into thinking that this government is doing something about the carbon problem, stir up trouble in progressive circles, and derail any effective moves to cut back on carbon emissions. Said effective moves would also cut back on the economy, anathema to this government.If this government were serious about controlling carbon through price manipulation, they would have put a tax in place that prevented the price of fuel from falling below the high point of last summer, around $1.50 per litre. They did not do that because controlling carbon emissions is not what they want to do. If it were, they would have also cut subsidies to the extraction industries and stopped issuing leases to them.A truly environmental approach to the carbon emission problem would not try to use market forces to find a solution, because there is no market solution. We have an environmental problem, not an economic one, and the answer is hard caps with measures to control prices and ration carbon so that everyone gets a fair share. Let the economy adjust to the environment, not the other way around.The NDP is correct when they say that the Liberal’s carbon tax is a rip off. Their only mistake is to focus their opposition on the economic component rather than on the environmental one.

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