As one of the only two provinces in Canada that have existing carbon taxes( the other one is Québec), British Columbia has been famous for its beautiful natural environment and consistently high gasoline price. According to the GasBuddy.com, the average gas price in the great Vancouver area for this week is about $1.37 per liter while the average price in Toronto is only about $1.27 per liter. Some people in British Columbia think that they involuntarily pay a relatively higher price and blame this on the Carbon Tax implemented by the BC government since 2008. The B.C government has been continuously claiming that the practice of the carbon tax has benefited not only the environment of B.C, helping reducing the greenhouse emission, but also the BC residents via tax reductions, which are guaranteed by the tax revenue generated by carbon taxes. However, the evaluation of the whole program is mixed.
Based on the information provided by the recently updated Carbon Tax Review released by the BC Ministry of Finance earlier this year, the carbon tax, which is first introduced on July 1, 2008, is charged on every tonne of greenhouse gas emission (GHG) emitted. The original purpose of the carbon tax is to create incentive for BC households and firms to reduce their amount of fossil fuel consumption. Generally, this is no exceptions for any industries in British Columbia, as long as there is a need of purchasing fuel. Another aim for this policy, stated by the B.C government, is to make lean energy relatively more attractive than fossil fuel. When the tax was initially imposed, the rate was considerably low, and it gradually increased over time. In July 2011, the tax rates was $25 per tonne of GHG, and the last time the tax rates were adjusted is July 2012. Since then, the rate has been $30 per tonne. The B.C government makes it very clearly that the Carbon Tax is not designed in a way to meet the emission-reduction targets solely. Rather, they consider it as an important strategy and a complement of other emission-managing systems. The B.C government uses a data from a reported published by an independent consulting company, MK Jaccard and Associates, to demonstrate the potential of this policy: “in absence of all other GHG reduction strategies, the carbon tax alone could cause a reduction in B.C’s emissions in 2020 by up to three million tonnes of CO2 equivalent annually”. Since the beginning of implementing the Carbon Tax, the B.C government has promised that it would be “revenue neutral”. This means that all the tax revenue generated by the carbon taxes will be distributed back to B.C families via tax reduction programs, such as income tax credits and cutting some income tax rates. In the Carbon Tax Review, it states that the B.C government has returned $500 million more than what they have collected via the Carbon Tax to the public.
It has been more five years since the Carbon Tax has presented, and whether it has worked as well as suggested by the B.C government still remains datable. In August, 2013, an Ottawa-based think-tank, Sustainable Prosperity, issued a report, BC’s CARBON TAX SHIF AFTER FIVE YEARS; RESULT, and concluded that the B.C carbon tax policy has produced a remarkable reduction in both fuel consumptions and emissions of greenhouse gases. The report states that from 2008 to 2011, compared to other provinces/regions, the per capita consumption of fuels in BC has decreased approximately 19%, and this is largely due to the fact that the carbon taxes include almost 77% of the GHG emissions in BC. The report also shows there has been any negative effected generated by the Carbon Tax on BC’s economy and the overall taxation has not changed much. For the year of 2011, GDP per captia of BC was increased by 1.92% while it was 1.38% for the rest of Canada. However, some believe that the success in reducing GHG emissions is actually on the cost of economic loss, and the policy may not very cost-effective. In 2013, the Vancouver Sun also hired a B.C local consulting firm to conduce a survey on similar topics. The results of this survey seem providing some evidence for the claim that the Carbon Tax has hurt the BC economy: around 5% of the gasoline retail price comes from the Carbon Tax in the great Vancouver area, and prices of other types of transportations fuels such as disables have been increased partly due to the implement of the Carbon Tax. Many business owners failed to contract their consumption on fossil fuels because they hardly found any relatively cheaper substitutes. Some of them even revealed that they would like to operate their business and make investments in places with lower emerge taxes. The Vancouver sun uses these results as evidences that the B.C government may need to rethink about the program. In the Carbon Tax review, the B.C government also points out that the Carbon Tax is a tool of redistributing income among BC residents: using the tax revenue to assistant the low income families, especially those in the northern and rural areas. However, a 2011 report prepared by Canadian centre for Policy Alternatives(CCPA), Fair and Effective of Carbon Pricing, shows that the Carbon Tax has not performance well in term of distributional effects, and it claims that “Even after tax cuts and credits are figured in, the carbon tax has a disproportionate impact on low-income British Columbians, and most benefits the highest-income households that are also the biggest emitters”: about 54% of the tax revenue went to cooperate income tax cuts; low income credits in fact had decreased from 33% in 2008 to 19% in 2011; the poorest 10% households in BC spent around 1.3% of their incomes on carbon taxes while the richest 10% only used 0.3% of their incomes on carbon taxes.
The BC Carbon Tax policy has only been introduced to the public for less than six years, and complete evidence about its influence on the economy of BC has not been available. Therefore, it would too early and very incautious to make any conclusion or judgments on it. However, the Carbon Tax enables British Columbia holding a leading position of Climate Changes in the North American region.
References:
Finlayson, Jock. “B.C.’s carbon tax hurting businesses.” Vancouver Sun. Vacouver Sun, 1 Aug 2013. Web. 9 Mar 2014. <http://www.vancouversun.com/business/2035/carbon hurting businesses/8739247/story.html
Lee, Marc. “Fair and Effective Carbon Pricing .” CCPA. CCPA, n.d. Web. 9 Mar 2014. <https://www.policyalternatives.ca/…/CCPA-BC_Fair_Effective_Carbon_F>.
STEWART, ELGIE , and Jessica MCCLAY. “BC’S CARBON TAX SHIFT AFTER FIVE YEARS: RESULTS.” sustainable prosperity. sustainable prosperity, n.d. Web. 9 Mar 2014. <www.sustainableprosperity.ca/dl1026&display>.
Lee, Marc. “Fair and Effective Carbon Pricing .” CCPA. CCPA, n.d. Web. 9 Mar 2014. <https://www.policyalternatives.ca/…/CCPA-BC_Fair_Effective_Carbon_F>.