July 29, 2010-By Stewart Elgie, Nic Rivers and Nancy Olwwiler in the Times Colonist. The carbon tax has obvious moral appeal. By tying the pollution tax to reduced income taxes, B.C. has shifted from taxing “goods,” like working and entrepreneurship, to taxing “bads,” like pollution.
It’s hard to tell which has sunk lower: BP’s share price or the prospects for government action on climate change.
Despite daily reminders of the growing costs of oil addiction — from blackened Louisiana shorelines to the melting Arctic — climate change seems to have dropped off global leaders’ agendas. The recent G20 declaration paid lip service to the issue, the U.S. Congress seems increasingly unlikely to pass a climate bill this year and Canada’s official policy position is to say “after you” to the U.S.
All of which makes British Columbia’s approach even more remarkable. On July 1, 2008, B.C. embarked on an ambitious climate policy path and brought in North America’s first carbon-tax shift.
Though praised by environmentalists and economists, the measure was met by a host of concerns — that it could increase taxes, decrease growth and hurt low-income families. Some pundits labelled it political suicide.
Two years later, it is possible to make a preliminary assessment of the tax. The conclusion is that B.C.’s policy experiment seems to be working.
B.C.’s carbon tax has two parts. First, it puts a price on emissions of carbon — the main greenhouse gas, which comes from burning oil, gas or coal. That cost is now $20/tonne (it rises by $5 annually).
Second, the revenues are returned as tax cuts for individuals and business.
What effects has this had so far? Although it’s impossible to precisely identify the impacts of the tax shift in an economy with thousands of changing variables, initial results allay concerns that it would harm the economy.
In fact, B.C.’s economic growth in 2009 — the first full year the tax was in effect — was higher than Canada’s national rate. Unemployment, although high because of wider economic events, is below the national average and does not appear to have jumped when the tax shift came in. (MORE)