For a quick refresher on the B.C. carbon tax, see here. In short, it is tax levied on the use of fossil fuels, so as to discourage the production of carbon dioxide.
“During the first two years of the carbon tax, some $848 million has been collected. The corresponding personal and business tax cuts have returned over $1 billion to British Columbians. That is $232 million more returned to British Columbians through tax cuts than was collected from the carbon tax”. -B.C. Government
I have three points that I want to make:
1) The carbon tax needs to be better adjusted to help lower income households adapt. Currently, the B.C. Low Income Climate Action Tax Credit is paid quarterly and provides $105 per adult and $31.50 per child annually to compensate for the carbon taxes they pay. Keep in mind that energy efficiency home retrofits are not cheap. Lower income housholds will only make the changes if they have a compelling economic motivation to do so.
It would be far better if the government gave compensation measures which would provide a greater amount of capital. Compensation measures such as lump-sum redistribution can provide low-income households 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.
Middle and higher income households are more likely to shift to energy efficient appliances (or to public transit) if they know it will save them money in the long-term. Lower income households live from pay check to pay check worrying more about how to keep their houses warm than how to reduce their household's carbon emissions.
2) According to CBC, the Sightline Institute, a Seattle non-profit research group, found a 10 per cent increase in per capita gasoline sales in the province in 2009, the single largest increase in B.C. in at least 30 years. This seems paradoxical considering the carbon tax was implemented in 2008. This also suggests that the current rate is not high enough. Carbon tax experts like Marc Jaccard have argued that carbon taxes need to hit $200 per tonne of CO2 if the Province wants to achieve its GHG targets. Such an increase will surely change consumer and household behaviour on carbon intensive activities i.e. driving, air conditioning use, home heating etc. Though, that figure is really high and would have serious economic ramifications if phased in too quickly.
3) Corporate and income tax cuts are necessary but equally important is that of investing in public transit, renewable technology and green jobs. The B.C. government has not been very transparent about how it is using revenue from the carbon tax to provide funding for the aforementioned items. Cities like Vancouver and Victoria would benefit immensely from such funding. It would generate more resources for the Greenest City Action Team in Vancouver as Vancouver has aspirations to become the world’s greenest city by 2020. With the amount of revenue coming in from the tax, the sustainbility opportunities --from investing in clean technology and public transit to green roofs and composting-- are extensive and wide ranging.
Key message: The carbon tax has a lot of room for growth in B.C. Let’s start with helping lower income households make the necessary adaptations (such as direct compensation measures) to green their homes.
Some links on the Carbon tax:
CBC Article: http://www.cbc.ca/canada/british-columbia/story/2010/06/30/bc-carbon-tax-increase.htmlB.C.
B.C. Governemnt: http://www2.news.gov.bc.ca/news_releases_2009-2013/2010FIN0040-000788.htm
The Policy Note: http://www.policynote.ca/bcs-carbon-tax-turns-two/
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