In British Columbia, there are multiple methods that exist in reducing congestion. One of those major ways is by promoting the use of public transit. Doing so reduces the use of private vehicles. However, another way to reduce the use of private vehicles is to find a way to tax their use more heavily. The one that I most want to investigate is the use of the parking space tax that is currently utilized in BC. Currently the parking tax is levied on commercial parking spaces of whose rights are sold to users for varying levels of time including hourly, daily, monthly, and yearly (Translink). Essentially, the parking lots operator is charged the tax so they increase the price of parking. Although we regularly see rates of parking that are even charges when hourly or daily (e.g $6 daily on weekends), they is simply because the operator will just increase the price to a higher level that is easier to pay for the user instead of odd numbers after accounting for the tax. Then, they just pay the larger tax amount. If you pay for a monthly or yearly fee, then that tax is much more explicit in its charge. Currently, according to CTV, the charge for the tax is 21% before HST. This tax revenue is collected by Translink and then used to fund the public transport system. By having this relation in both creating disincentive to drive and creating a better public transport system, we can see how there can be a significant decrease in congestion.

There are several exemptions of course. If there is a parking space that is for your place of residence, then you do not have to pay. Also, if you park on a street that uses parking meter parking then that is not included as well (BC Laws). Essentially, that means that the overall coverage includes parking lots and large parkades, which are mostly in the downtown core. As such, it is mostly charged to people who decide to drive into the downtown core and decreases that overall level. Taking this knowledge, this tax affects anybody who drives into the downtown core for any reason and decides to park. Through common sense, the people that drive into downtown the most and utilize these parking spaces are those who work there.  It does affect people who drive there on evenings and weekends, but less so due to the charge for parking being less during this time period thus a lower dollar value amount of tax paid.

The poor are thus not affected as negatively if they are not driving into the downtown area in the first place. If the poor are shown to be taking transit in the first place then this tax should help them if the revenue given to Translink is actually used to improve service for the poor. Those who will most likely be affected by the parking tax are most likely the upper class downtown workers who drive to work and the middle class. The rich are now paying a larger amount for the parking spot due to the tax and that revenue is being used to fund transit. The only benefit that they may gain from this can be from the decreased congestion, which will lead to less traffic in their commute. What must also be noted is how some of the rich are not drivers at all if they live in the downtown region of Vancouver and thus do not have a need to drive and park near their workplace. The middle class on the other hand may be hurt in various ways. In one way, if they continue to drive, then they will be affected in the same way as the wealthy drivers. However, those who now decide to take transit instead of driving can also be hurt due to the lost utility from driving. In effect, the increased transit improvements should outweigh this cost, but if the policy is not as effective, then it may not.

As of the time of this writing, there are not any readily available resources involving the full effectiveness of this tax; however I will state some ways that we can find this out. First, we would need to analyze how much money is gained from the tax. Then, as stated above, we will need to see how effective Translink is in utilizing the money. This of course is not easy for an outside observer, but it would definitely be possible by looking at net returns of the various projects that Translink puts into place. After analyzing this, we would need to examine the role of the tax in getting less people to drive and onto transit. It is often very difficult to find the exact amount of transit users that there are, but what may be more possible is to see the overall decrease in cars that are parked in the lots according to the tax revenue that is gained.

http://bc.ctvnews.ca/coalition-blasts-translink-s-35-per-cent-parking-tax-1.737774

http://www.translink.ca/en/About-Us/Taxes/Parking-Tax/FAQs.aspx

http://www.bclaws.ca/EPLibraries/bclaws_new/document/ID/freeside/00_98030_01#section30.1

Greater Victoria Sewage Tax:

Greater Victoria is seeking to have a sewage tax increase placed upon homeowners within the region. This tax is to be used to pay for the damage that the sewage dumping can cause upon the water within the region. Essentially, the sewage water that comes from Victoria is being sent back into the Juan de Fuca Strait with only primary levels of treatment.

Primary treatment of wastewater is the first step in the process of treating wastewater before it is disposed of. This step involves collection of the wastewater and allowing the solid waste to settle to the bottom, which would then allow the water and oils to go above. The waste that has settled is then extracted and use for other uses such as fertilizer and methane productions. Then, what is left will then move to the next step of secondary treatment. Secondary treatment is based on taking the wastewater with its suspensions and other dissolved elements and removing them from the water. This is done through the use of various organisms, which can eliminate them. Following this, the water is then disposed of or goes through a tertiary treatment.

The main problem that is arising is that the sewage in Victoria is only undergoing the primary treatment and not the secondary treatment. Thus, that water with the suspensions and dissolved material is being dumped into the ocean and polluting it. Victoria has been seeking to fund a new treatment plant in order to at least perform the secondary treatment. However, in order to do so, they needed to create funding, 1/3^rd of which is being funded by the Federal government. Another portion is being funded by the Provincial government and the rest being funded by the Municipal. In order for the municipal government to create funding, it has sought to create a much larger sewage tax.

The sewage tax is based around taxing a specific level on homeowners according to the region that they live in. In a sense, this should be in the region that is most likely to cause damage set at approximately 200-300 per year. However, it is not a tax on how much sewage is actually disposed of by the household. As such, this is fairly disproportionate in making those who cause the most damage as being those who pay the most as it is a uniform charge depending on the area that you are in. The original proposal was to have a tax based on the estimated value of the house with a charge of approximately $232 per annum for every $100000 that your house is worth. This one too would be fairly unfair, but at least slightly increases the accountability of users who exude the most sewage. The higher the value, the more waste that is usually disposed of due to those with larger incomes having more to dispose of and often the larger households having houses worth more.

With the municipal government needing to raise approximately $260million dollars in order to pay for the treatment plant (the total cost being 783 with the Federal and Provincial governments paying the remainder), the government needs to raise a significant amount of money. By charging the amount that they are, in order to find how appropriate the tax is, we would need to investigate both how long the tax will be in place and who will apply to. In this sense, everyone that is can be responsible for the emission will be paying the tax, but the length of time that it is paid is not clearly defined. What we can do to examine the pricing of the tax is to look at how many households are approximately in the area, which is approximately 102613 according to BC Stats as of 2011. This project would be paid off in approximately 10 years if the tax has an average of $255 per annum. Even with a very brief look, it would seem that this tax is a reasonable amount to account for the cost of the project. Of course there would be the added costs of maintenance, but the project would definitely be expected to last well beyond 10 years. However, what is contentious is whether the tax may be too high and disproportionate and that may be possible.

With a tax that is placed at almost a flat rate across the population, it will negatively impact the poor of the region. Basically, this will occur because they will be forced to pay a much larger proportion of their income on the tax. However, what should not be forgotten is how the tax is on homeowners themselves and not necessarily on the people living in the house itself. As such, renters will not necessarily be directly affected. The poorest income levels are often those who are renting so it can be argued that they will not be affected. However, this can definitely be countered with the ability of the landlords to simply increase the monthly rent to account for the tax itself.

Clearly, the new waste management facility should be effective in improving the water that is sent out. However, since the tax is a flat rate, which does not vary over time, it will not create disincentive to decrease waste. Of course, how much can people decrease the level of their waste water? The main level of contention of course would be the level of the tax and how appropriate it is to pay for the facility without hurting the population too much.

http://www.bced.gov.bc.ca/schools/sdinfo/acc_contracts/2013/61.pdf

http://www.canada.com/news/Floatie+returns+sewage+issue+raises+stink+Victoria+byelection/7600903/story.html

http://www.theglobeandmail.com/news/british-columbia/sewage-at-centre-of-victoria-by-election/article5582535/

http://www.saanichnews.com/opinion/174656351.html?mobile=true

http://www.vancouversun.com/news/Greater+Victoria+sewage+committee+votes+keep+project+flowing/7617633/story.html

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

Well everyone, it ends up that I’ll be using this blog again, but this time talking about environmental economics topics.

So, first up is the topic of shale oil and gas. Recently it has been a major issue in the U.S and has been considered to be a huge boom industry:

http://belfercenter.ksg.harvard.edu/files/Oil-%20The%20Next%20Revolution.pdf

However, at the same time, the negative effects of it are starting to show as well. As of recently the fallout of the shale gas is visible up in the reaches of space. This comes from the flaring of the natural gas that comes out. Essentially, this gas could be used as a natural gas for power, but the low value of it makes it uneconomical to capture this gas so it is burned instead.

http://www.cnbc.com/id/100412356/Shale_Gas_Boom_Now_Visible_From_Space

It seems that celebrities are in the battle as well with Yoko Ono and Sean Lennon (John’s son) not too pleased the the fracking that is happening in New York and the negative effects that it brings.

http://www.bloomberg.com/news/2013-01-23/on-new-york-shale-gas-yoko-ono-and-sean-lennon-say-let-it-be.html

Finally to close out, here’s a better example of those externalities with an organic dairy farmer who happens to have her farm on top of the Marcellus shale, a large deposit. She has seen increased levels of the gas and metals on her farm.

http://www.theecologist.org/News/news_analysis/1784330/dairy_farms_suffer_in_us_shale_gas_fracking_boom.html

From all of these, we can see the multiple levels of players in the topic of shale oil and gas, at the base level we see the farmer who is nearby on the these deposits and see first hand the externalities of the extraction. Then, we see those who are protesting against fracking and the building of the infrastructure for the industry due to the aforementioned externalities on the local community. On the next layer, we can actually see what happens during the flaring that occurs during the extraction. Then, at the top, we see the potential for this industry to create unleash untapped potential for the economy. It is clear that there will be huge levels of conflict and it will be interesting to track how it plays out.

Next time, I’m going to focus a little bit more on that whole idea of “unleashing untapped potential for the economy,” for better or worse.

Well guys, it was really fun blogging about all of this stuff, but I suppose that this can be our last one as we were told we could start to wind it all down. The past week really got me disheartened in the whole system so I don’t really feel like I should bother. I got hit with tons of problems with the system because of soybeans taking the wrong price. I suppose I will be experimenting on some different things bit by bit. I will continue to make comments on blogs and keep up with stuff on twitter, but until the end of the course, my blogs will be much more sporadic.

I guess I should talk about what “theoretically” went right for me. I did technically lose a significant amount of money, but it was almost entirely due to the system continuing to take the wrong price on soybeans. However, I did “make” money from going short on soybeans. I mentioned in my presentation that on the weekly charts for soybeans they were showing a head and shoulders pattern so I had triggers set at 1500 (the support level) to go short if it broke through that point. Once it did, prices took a freefall and have fallen approximately 75 points as of Sunday. I did forget to mention in the presentation that it was Victor who point it out. TOTALLY FORGOT TO SAY THAT AND I SHOULD’VE, SORRY!

I may still experiment on corn for a little while. I also mentioned in class how I was uncertain as to whether it was a downward triangle or rectangle that I was seeing and right now I’m still not sure and have continued to trade it as a continuation pattern rectangle. Maybe there might be some other signals in the future.

On another note, if anyone is reading this, do you happen to know any other sites where we can practice our trading in commodities futures? Also, are any of you familiar with some good discount brokers?

Well, the whole head and shoulders that I saw coming seemingly has ended. However, there is another one that appears to be out there that I am more than willing to start trading. Victor pointed this one out to me a while ago, but I felt that it was much more of a long term trend than a short term one. So, even though I have made large losses in my equity balance recently, I need to be long term thinking on this one. Looking at the weekly charts of soybeans:

Courtesy: CME Group

I’m seeing a bit of a head and shoulders, which should be projecting up to the 1600 range. As it hits to that point, it looks like it will take a huge fall. There looks to be a bit of a support level at about 1500. So, if it breaks below that point, go short and get ready for a tumble.

So I’ll just quickly shoot out a  resource that I found recently dealing with technical analysis. It’s a great book that you can read, which is fairly comprehensive. I have just recently started reading it, but am nowhere near finished and have recently had to return it back to the library. I strongly suggest you check it out.

http://www.amazon.ca/Technical-Analysis-Complete-Financial-Technicians/dp/0131531131/ref=sr_1_1?ie=UTF8&qid=1352080955&sr=8-1

Disclaimer: This will be my least professional blog entry ever.

There are always going to be so called experts who often give their opinion on everything. Former football players will sit in front of the cameras and say who is going to win on Sunday according to their own analysis. There are often times that these analysts will agree completely. There’s going to be the armchair analysts saying there’s NO WAY the Patriots can lose to Peyton’s little brother. I firmly believe that the collective mind is ignorant of the future for many reasons. However, I do find that advice is always useful and I received two pieces of it recently that I should have listened to.

A few weeks ago, Brady had said that he tried day trading and took a big hit because of the lag of the system. I tried to have a go at it myself on Monday and Tuesday. Want to see what happened?

Completely swung and missed on almost every one. -3000. That’s ok, I’m not mad.

I decided to read Mark’s blog and he mentioned how it would be “ungentlemanly” to take advantage of prices with the Sandy taking out the East coast and knocking out many traders from the market. I on the other hand felt that I should pounce on the opportunity if I find one, regardless of the circumstances. Then I look at the charts, and see my head and shoulders that I’ve been predicting FOREVER. Then, it finally hits, goes up about 20+. Great, I close two of my 4 positions. Was in at 1539, out at about 1560. Yet this is what I see on my trading log:

1527? Are you serious? At the point of me closing the trade, prices were not sub 1530 for weeks. Look at the chart!

I look at the price that we’re seeing on the game and saw this at the time:

Um, ok, sure, lets set the price 25 points below the actual. -1200 more instead of plus 1200 so now at ~-4200. So now I’m officially frustrated. Ok trading game, maybe you’ll adjust later so I’ll just add two more contracts. Awesome! Jumps up to 1560. I figure, hey, I’m about to make back my losses. Maybe, I’ll just set a limit trade just in case things go south. And south they went. Ends up I messed up on setting the limit trade properly again. Prices collapsed down to sub 1520s and the limit did not trigger. So here I sit, with my balance at 39992.79. Dropping over 8000 and in the red by about a Big Mac meal.

So in the end. I really should have taken their advice. Do not day trade with this system (I know I should’ve have made gains but the system did not agree with me). Do not mess with karma, be a gentleman and do not profiteer when others are not able to compete adequately with you. In conclusion, individual advice from someone you can trust really can be better than the collective.

P.S: Dear trading game,

I will be back.

Cheers!

On the road ahead I will be sticking with my prior analysis of soy prices rising a little bit more and corn prices taking a tumble. As of right now, there has been some slight unrest in the soy prices with them taking a slight drop on the Sunday. However, I need to remain confident. In fact, I will be taking a long position in the morning to add to my current long contract. I do really want to get back into the wheat market after it treated me so well for so long, but I simply cannot find any real trend through my technical analysis. Others are saying that the continuation pattern will happen, but I simply feel that it has ended due to the lack of the wave pattern. The candlestick analysis is not showing me anything too definitive and any move that I make would simply be a mix of guess work and hope that the wave happens…

I feel that if the wave had continued, it would have already done so by now and as such, I will be staying out of wheat for until I am more certain. For those of you brave enough to stick with a pattern, go with a short… but be warned.

This week I really just stuck with the technical analysis that has been working for me for quite a while now and I was able to maintain my targeted gains of 1k. I made the majority of my money by longing soybeans and shorting corn. Both of these were from a head and shoulders pattern that was being shown in both. In soybeans, I say an inverted head and shoulders and in corn I saw a regular head and shoulders. However, the one that I saw in corn was not as well defined as I had hoped, but it has paid off a little bit none the less.

The head and shoulders pattern that I have seen on soybeans on the other hand was a little bit better defined and paid off through much of this week. However, instead of holding my position, I closed it when I had made some gains. Later in the day I had second guessed myself and decided to jump back in. I had seen the support level at approximately 1540 and had gone long at that point, but got out at approximately 1550. I got back in at 1560. It had reached into the mid 1560’s by the end of the week. I then tried to get out of the position, but I realized that it would not end up going through the system so I canceled the trade. Over the weekend, I realized how costly this may be due to a drop in price on the Global Exchange. All in all, it was an average week with some average gains and the usually slight mistake that hurt possible gains.