British Columbia's Carbon Tax...

Ever since BC introduced its Carbon Tax way back in July 2008, it has faced a lot of opposition and disapproval. The government of BC has made it explicit that the carbon tax is forecasted to generate an estimated $1,849 million over three years. This number is being bashed left, right and center from carbon tax opponents around the country. Some of the more common arguments are that it is a "tax grab" and that it negatively impacts consumers and lower income residents who are disproportionately affected by it. For those unfamiliar with BC's carbon tax, here's a quick synopsis of it. The tax is currently enacted in British Columbia’s legislature, it taxes carbon-based fuels including natural gas, diesel, gasoline, and home heating fuel at a rate of $10 per tonne of greenhouse gas emissions generated. The tax is revenue neutral. Revenue neutral is when you set higher taxes for things that are bad like pollution, and corresponding reduce taxes on things like income and businesses, which are good for the economy.

Ostensibly, the Climate Action Credit is not even adequate enough. This credit is meant to help lower-income and working families and provide them with an annual payment of $100 per adult, and $30 per child per year. This initiative is designed to provide credit to offset the cost of the tax and encourage households to use the credit for energy efficiency, home retrofitting and vehicle fuel costs, but it cannot be guaranteed that the money will go towards these activities. Heck, even the NDPs of BC have complained and stated that the tax will force cuts to vital health services, as Ambulance costs are projected to rise.

Amidst this whole carbon tax debate, industries and households are criticizing each other over who emits more carbon. Industries "need" to continue producing in order to maintain competitiveness. They claim that the carbon tax will damage their profits and in turn affect the domestic economy. In short, they are not happy. Residents of northern British Columbia are particularly discontented with the tax, stating that because they rely more on automobility and home heating, the costs will be exorbitant and financially burdensome.

A couple of solutions to this problem and ideas from Europe: 1) introduce compensation measures. Compensation measures use part of the fiscal revenue from the tax, to compensate those most affected by it. Compensation measures such as lump-sum redistribution to the population can alleviate the negative impacts on low income households. Lump-sum redistribution can provide low income and average families with a single payment, rather than a series of payments. This can help households make the necessary consumer changes all at once and assist them with budgeting for less carbon intensive products and making more efficient use of energy. However, this can only happen with regulation. 2) require industry to introduce less emitting technologies that could compensate industrial polluters for additional abatement costs.

In other words, the government can help industry pay for technological improvements so less carbon dioxide is emitted. Also make them invest a portion of their income into research and development in renewable energy and energy efficiency to mitigate total carbon dioxide emissions. Partial exemption to the industries of British Columbia could also spur investment for research and development, thereby maintaining competitiveness and forcing industry to adopt more environmentally friendly practices.

I did extensive research on BC's carbon tax for my public policy class. These are just a few ideas.