Economist Marc Lee is making the case that the B.C. Liberals' cut corporate income taxes so deeply that the provincial carbon tax -- which was presented as part of the justification for those cuts -- is now a money-loser for provincial taxpayers.
"B.C.'s carbon tax was supposed to be 'revenue neutral,' meaning all carbon tax revenue would be 'recycled' to British Columbians through personal income tax cuts, corporate income tax cuts and a low-income credit," Lee writes on a Canadian Centre for Policy Alternatives (CCPA) blog called Policy Note.
"But recent budgets have shown a carbon tax deficit: tax cuts have completely swamped carbon tax revenues. While some were concerned that the carbon tax would be a 'tax grab', instead we [have] a carbon tax is that is revenue negative not revenue neutral," Lee writes.
Lee argues that while the government's tax cuts came reasonable close to covering the carbon tax in it's first year (2008/2009), the "carbon deficit swelled" in 2009/2010 when "carbon tax revenues were $542 million, while tax cuts and credits cost $767 million" for a deficit of $225 million.
"Looking forward, budget projections show that the trend of deficits on the carbon account continues for the duration of the three-year fiscal plan," Lee writes.
The CCPA economist points to corporate tax cuts as the culprit:
"Corporate tax cuts are now absorbing the lion's share of carbon tax revenues. In 2010/11, they will be equivalent to 57% of carbon tax revenues, compared to one-third in 2008/09.
"Cutting corporate taxes is the worst possible way of using carbon tax revenues. This is because of the intense concentration of ownership of capital at the top of the income distribution (when you hear corporate tax cuts think upper-income tax cuts), and also because shareholders outside BC, who pay no carbon tax, benefit from corporate tax cuts. While it might make sense to provide tax credits for investments in energy efficiency, corporate tax cuts essentially reward the worst offenders when it comes to greenhouse gas emissions.
"A final note: the 2010 budget provides for an increase in the low-income credit as of July 2011 (in a previous post I mistakenly reported this as occurring in 2010) to $115.50 per adult and $34.50 per child. That will represent an increase of 15.5% in the value of the credit since the carbon tax was introduced in July 2008. Meanwhile the tax itself will be 150% higher as of July 2011. The result is an increasingly regressive carbon tax and revenue recycling regime."
Monte Paulsen writes about carbon shift for The Tyee.
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Toobad
1 year ago
INFLAMMATORY AND ABUSIVE COMMENT...
...DIRECTED AT A TYEE WRITER REMOVED.
MODERATOR.
Sask Resident
1 year ago
High Gasoline Prices
Gasoline prices are very high, an not just due to the 2¢/L 'carbon tax'. Gasoline is 7¢ to 10¢/L more than in other provinces with the only effect at discouraging people visiting or staying in the province. Americans stay really close to the border as do most Albertans. Why would anyone build a house in BC?
A tax or government fee is a tax, and all the hidden and energy taxes hurt the BC economy. One has to make money to pay income tax so tax breaks are an advantage to the wealthy while everyone, even the poor, pay the value added taxes and government fees.
BC = Bring Cash!
Frank
1 year ago
Sask Resident
Actually the carbon tax is just over 5 cents a litre.
Other than that I agree.
snert
1 year ago
Be careful what you wish for.
The tax can be made revenue neutral again quite easily, just raise it more and watch visitors vapourize.
wisemonkey
1 year ago
Get rid of it
If the taxpayers are losing money on it let's get rid of it. It might balance a bit of what is being paid in HST.
I don't think the public would mind judging from how much they didnt like paying the extra HST.
DPL
1 year ago
Did anyone actually believe
Did anyone actually believe the tax was going to be revenue neutral? Gordo wanted to raise his profile as a Green guy and that was it. heck he even had Suzuki telling us what a great guy Gordo was. Another one of our shifty premier's vision that was not well thought out.
speaking of gas prices, Victoria is at 112 a ltr.and unless we want to walk, well we pay.
G West
1 year ago
Not a huge surprise
As predicted, the latest Campbell money laundry has not reduced CO2 production by a single gram; reduced the use of fuels by a single litre; increased the availability and affordability of atmosphere friendly and affordable public transit; helped convert a single work vehicle to natural gas or made living in Vancouver (and not commuting) more affordable and feasible for anyone.
The only people fooled by the spin cycle of the Campbell Wurlitzer appear to have been 'environmentalists' like Suzuki and Andrew Weaver - both of whom lost whatever credibility they once had by shilling for Campbell and his phony tax before and during the last election cycle.
How many ways can I put it:
I told you so.
Karen D.
1 year ago
Campbell's economics
Charging a carbon tax and using the revenue to lower corporate taxes? Isn't that basically how the HST works? According to Campbell this will have big business swarming into the province enmass any time now.
crankypants
1 year ago
Another example
This is just another example of the incompetence of the BC Liberal Party under Gordon Campbell's leadership.
The real scary thing is that they actually believe that they have done a good job.