A Sustainable Prosperity study by Stewart Elgie and Jessica McClay that reported fuel consumption in British Columbia has declined by 18.8 per cent more than in the rest of Canada since adoption of the carbon tax has prompted howls of disbelief from predictable quarters. However, Elizabeth Nickson’s recent commentary, “Carbon taxes a war on poor” (Issues and Ideas, Aug. 15), sets a new low for errors of facts and logic.
Contrary to Nickson’s assertion, Elgie and McClay do not claim that the entire reduction in fuel use in B.C. is attributable to the carbon tax. They do argue that divergent trends in fuel consumption in B.C. and the rest of Canada are suggestive that the tax is working, but the authors are careful to acknowledge that further analysis is needed.
Their conclusion is strengthened, however, by a more recent study by economists Nic Rivers and Brandon Schaufele. After statistically controlling for other potential explanations, including differences among provinces in gas prices and economic conditions, the authors attribute a 12.5 per cent reduction in gasoline consumption to the B.C. tax. (Elgie and McClay’s figure is for all petroleum fuels subject to the tax.)
Nickson argues that the decline in fuel consumption can be explained by British Columbians fleeing the carbon tax to purchase their gasoline in the United States. Let’s consider the evidence. There was an increase Canada-wide in single-day trips to the U.S. from 2008 to 2012. That is consistent with the strength of the Canadian dollar, which accounts for most historical variation in cross-border shopping. Saving money on gasoline — and a host of other goods — appeals to Canadians in all provinces.
The increase in single-day trips from 2008 to 2012 was largest in B.C., however. This is consistent with a carbon tax effect, though other explanations also are conceivable. Geography makes it easier for British Columbians than other Canadians to flock across the border when the dollar is strong. And there were accounts of increased cross-border shopping after the HST was introduced in 2009.
Still, even if all these extra border-crossers refilled their tanks — about one extra trip per year per vehicle in B.C. — that would account for about a two per cent drop in annual gasoline consumption, or about one per cent of all petroleum fuels. Cross-border shopping cannot account for the large decline in fuel consumption since 2008.
Nickson further claims that the tax is not revenue-neutral because it costs a trucker more to fill his tank after the tax than before. Revenue neutrality refers to the impact on government finances. Provincial carbon tax revenues have been fully recycled (and then some) via tax cuts, primarily to individual and corporate income taxes. That does not mean that the carbon tax will be revenue-neutral for each and every British Columbian. Emissions-intensive industries and individuals with more carbon-intensive lifestyles typically will pay more than they get back, while those with lower emissions will save money. That financial incentive for conservation is the whole point of the tax.
Piling on misleading arguments, Nickson erroneously conflates the provincial government’s commitment to carbon neutrality via the Pacific Carbon Trust with the revenue-neutral carbon tax. The carbon tax applies to all fossil fuel purchases, including those by government. Separately, the carbon-neutral government policy mandates that public agencies purchase offsets for any remaining emissions. It is admittedly confusing that government agencies are paying for carbon emissions in both cases, but they are quite distinct policies. No carbon tax revenues flow to the Pacific Carbon Trust, nor to the other programs Nickson cites.
However improbably, Nickson does stumble onto a truth — at least partly. B.C.’s carbon tax shift was designed to lessen the impacts on the poor by recycling some of the tax revenues via a low-income tax credit. B.C.’s carbon tax thus was less regressive than most other jurisdictions’ carbon-reduction policies. However, the low-income tax credit did not keep up with annual increases in the tax from 2009 to 2012. The easy solution there is to adjust the tax credit. Doing so is particularly important since those with low incomes, who are responsible for the least emissions both in Canada and globally, are projected to pay the greatest price if we fail to act on climate change.
Op-eds provide a valuable outlet for debates about public policy. However, those debates invariably draw on both political ideology and facts. We may disagree about politics, but we should all strive to get the facts right.
Kathryn Harrison is a professor of political science at the University of British Columbia.http://www.vancouversun.com/life/Opinion+please+facts+right/8808269/story.html