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BC 'carbon tax shift' a success, says think-tank report

B.C.'s carbon tax has worked to cut down the fossil fuels use of British Columbians to the lowest in Canada with little economic damage to show for it, according to a new report.

The study, entitled British Columbia's Carbon Tax Shift, weighed the B.C. carbon tax's impact on provincial fuel use against the performance of the provincial economy. And the results give the first clear evidence that the tax has helped reduce emissions while producing tangible economic benefits, said economist and Sustainable Prosperity senior director Alex Wood.

As a result of the carbon tax, he said, “you're starting to see in B.C. a separation between economic growth and fossil fuel use.” That “decoupling,” he added, would lead to a more “resilient” economy insulated from oil price shocks.

The report, put out by Ottawa-based think-tank Sustainable Prosperity, found that provincial per capita sales of petroleum products -- like propane and gas -- dropped nearly 15 per cent in B.C. over the last four years since the carbon tax started, while fuel sales across the rest of Canada edged up just over one per cent.

That decrease has allowed B.C. to slip into first place for least per capita fuel sales, just ahead of Ontario, at a time when B.C.'s population has continued to expand and its economic growth has outpaced much of the rest of the country, said Wood.

“The B.C. model is simple, it's elegant; it's a lot of different things,” said Wood. “You reduce taxes on income, on corporate income, and you promise to be revenue neutral and you make sure that happens.”

A 2011 Environics poll found 59 per cent of British Columbians support the provincial carbon tax, up markedly from 2008, when a near-equal number of British Columbians opposed the tax's implementation.

A recent Pembina Institute report found that broad support now exists for the tax, while a recent Tyee series also uncovered wide support for a carbon tax in the oil sands industry.

In the last two years, the carbon tax has remained a source of sustained controversy.

Provincial plans to increase the tax by $5 a ton a year were halted in February 2011, when the Liberal government announced it would cap the tax at $30 a tonne, leading to outcry amongst environmental groups.

Federal Foreign Affairs Minister John Baird earlier told Parliament that a carbon tax would “kill and hurt Canadian families.”

Wood says the Sustainable Prosperity report demonstrates such dire predictions haven't materialized, and that the B.C. policy could be easily exported. “There is no structural reason that any of the provinces couldn't do the same thing,” he said, adding “It's a matter of political will.”

Adam Pez is completing a practicum at The Tyee.

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