The carbon policy of British Columbia is based on a tax on emissions. The policy was first introduced in 2008 by the Liberal party with some opposition based on it possibly hurting the poor and hurting businesses. However, this was meant to be countered by the concept of revenue neutrality with all revenues being redistributed to the economy. Currently, this tax is set at $30 per tonne of Carbon Dioxide emissions. This tax is established on top of different fuels. However, what is important to note is that each fuel contributes a different level of emissions and because of this, the tax rate is different for each fuel according to how much it contributes:

It would seem that a large amount of the various fuels that can be accounted for already are. However, even though it is a carbon tax, there are other elements that can contribute to emissions. One of the major ones can come from the emission of methane from landfills, which is obviously unaccounted for in the carbon tax policy. However, this is one that should be considered in order to minimize greenhouse gas emissions in general, which should be the primary mandate, not just carbon.

When this policy was instated originally in the BC Budget 2008, it was meant to start at a lower level and increase by year up to its current level. These increments would be an increase of $5 per year until it reached its current level of 30$ per tonne, which is its current level. According to the 2012 Budget Fiscal Plan, there are no plans to increase this tax. However, it is suggested that by 2020, this tax in its current form should reduce emissions by approximate 3 million tonnes of CO2 (BC Ministry of Finance).

One of the key elements to the carbon tax is its revenue neutrality. Basically, this means that the government would reinvest any of the benefits made from the carbon tax back into the province. This reinvesting is multi-tiered in its structure. The government is set to operate on both the personal and business level. On the business side, tax rates are supposed to be decreased on both general businesses as well as small businesses (who pay lower rates already). The actual levels for general corporate tax went from 12% to 10% by the end of the incremental changes in January 1, 2011. At the same time, small business levels went for 4.5 to 2.5% by December 1, 2008.

From examining this, we see that small business actually sees a larger benefit in terms of percentage (of the percentage point change) to being only 55% of the original level before the carbon tax. Big business is now seen at a level 83% of the original so small business is seen as having a net larger benefit from the carbon tax. This seems to highlight the importance of redistributing the money from the tax to the smaller businesses. As such, a similar idea is seen in the role of the tax in affecting those in lower personal tax brackets.

One of the major problems seen with a carbon policy is that it would hurt the poor. However, the tax is meant to not only redistribute to businesses, but also to those who are considered to be in the lower ends of income. First, those in the 2 lowest personal income tax bracket would see a 5% decrease in their tax rate. On top of that, they would also receive a tax credit. As such, the expectation is that even though the poor are now paying more for their energy, they would be refunded through the use of these taxes.

I am of the belief that the tax has thus far been a success in terms of its effect on the environment, but a slight failure in terms of the economy and politics. According to an article in the Economist from 2011, the tax has led to B.C decreasing its per capita use of gasoline by 4.5% from 2008-2011. At the same time, B.C also showed significant drops in GHG emissions following 2008 according to the B.C Ministry of Environment.

According to a report by environment Canada made in 2012, there has been significant progress in multiple sectors of energy use in decreasing demand:

• Light Fuel Oil sales decrease by 24% since 2007
• Diesel sales decrease by 6%
• Natural Gas Demand by 10%

That same report also states that there has been 48% growth in clean tech sector sales. All of these seem to point toward the success of the carbon tax in helping create a greener economy.

However, I feel that economically and politically, the tax has not been as successful as it could have been. In one sense, I feel that the redistribution of the income has not been made as explicit or transparent. By a lot of the redistribution coming from tax breaks, the everyday consumer is unable to see it as clearly as possible. In fact, politically, it is possible that the government was planning to create the tax breaks in the first place, but simply tagged these tax breaks towards the carbon tax. This revenue neutrality suddenly disappears if it becomes clear that the government was seeking to create tax breaks already. This is also important to note when looking at who was in power at the time of its initiation: Gordon Campbell, a premier who has had a significant history of cutting taxes when times turn bad. What is also important is to note the entire timing of the entire carbon tax as well with it being at the same time as an economic downturn. Decreasing taxes on businesses could even be seen as a method of stimulus for industry, which could then in turn not necessarily be related to the revenue neutrality of the carbon tax. Of course all of this is a positive for the economy, but the problem is based on the political optics of it. So in short, I believe that it was successful in helping the environment, but the political economy itself was somewhat shady.

Reference List:

http://www.fin.gov.bc.ca/tbs/tp/climate/A4.htm

http://www.bcbudget.gov.bc.ca/2012/bfp/2012_Budget_Fiscal_Plan.pdf

http://www.env.gov.bc.ca/cas/mitigation/ghg_inventory/

http://www.env.gov.bc.ca/cas/pdfs/2012-Progress-to-Targets.pdf