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Carbon Tax Screws BC's North?

Finance Minister Taylor defends its fairness, rural or not.

By Tom Barrett 4 Apr 2008 |

Tom Barrett is a contributing editor to The Tyee with a focus on global warming policy and politics. You can reach him here.

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Carole Taylor: Regional balancing act.

One of the big selling points of the B.C. government's carbon tax is that it's revenue neutral -- the government says it's going to give back in income tax cuts every penny it collects in carbon taxes.

But a lot of people seem to be concluding that, for them, there's going to be more pennies going out than coming back.

Recently, a group of northern and Interior mayors has complained the tax will unfairly penalize people in their towns.

The idea behind the carbon tax is that, as the cost of fossil fuels goes up, people will switch to energy alternatives that are less harmful to the climate. When it comes time to replace your old oil furnace, for example, you'll switch to high-efficiency natural gas. Instead of driving a gas guzzler to work, you'll take transit or buy a Prius.

That's great for people who have alternatives, say the up-country mayors, but we don't have those kinds of choices.

It's cold up here

If you live in Williams Lake, the northern mayors point out, you can't hop on the SkyTrain. Plus it's a lot colder outside the big cities.

"Everybody up here does pay tremendous attention to their thermostats," Fort Nelson Mayor Chris Morey told The Tyee. "But when it's minus 40, that's cold -- your furnace is kicking in all the time and there's nothing you can do about that."

People who live in Fort Nelson must travel for hours in gas-thirsty vehicles, said Morey, who believes that communities like hers should be exempt from the carbon tax.

"People that work in the bush, for instance. There's sometimes 100 kilometres or more one way to the work sites and then back to the town at the end of the workday. There's these great distances. And the terrain, which requires heavier vehicles."

It's hard to say how typical such commutes are. Certainly, someone who's driving 200 kilometres every day in a heavy vehicle is going to be spewing one heck of a lot of greenhouse gas -- and paying for it.

Budget figures suggest that driving those kinds of miles in a pickup truck will cost you around $200 over the first full year of the carbon tax.

The heat is on

But there may not be that much difference in fuel consumption between the average rural driver and her urban counterpart after all. According to Statistics Canada the average car in British Columbia goes about 12,000 km/year. But if you rack up those kilometres crawling over the Port Mann bridge at rush hour every day, all that idling will burn a lot more fuel than the same distance driven on the highway around Fort Nelson.

And home heating bills may not be as high in the north as you'd guess. Unfortunately, no one seems to have any comprehensive numbers on home energy use in different parts of the province. The closest thing we have, it seems, is figures from Terasen Gas, which show that the average natural gas customer in the Interior and the north actually burns less gas than the average customer in the Lower Mainland and the Fraser Valley.

People in colder areas tend to insulate their homes better than people in the relatively warm and humid Lower Mainland, said Terasen spokeswoman Joyce Wagenaar.

Such averages must be used with caution because they are only one part of the energy puzzle -- they don't tell us anything about people who heat with oil, say, or propane, both of which are subject to the carbon tax.

Still, Terasen's numbers for Fort Nelson, where Mayor Morey says natural gas is used by almost everyone, show a 45 per cent higher gas consumption than the Lower Mainland. Over the first year of the carbon tax, according to figures in the budget, that would cost the average Fort Nelson resident about $16 extra -- a figure that still has them saving money over the year in most cases, thanks to the tax cuts.

Minister Taylor's 'rural scenario'

The B.C. budget contains what people in the Finance Ministry call a "rural scenario," based on energy use patterns in Revelstoke.

It calculates that a one-earner family making $70,000 a year, driving a pickup and a sedan and heating with propane at average Revelstoke temperatures will pay a total of $192 in carbon tax in 2009.

The same family should get back $201 in income tax cuts, making for a net benefit of $9, the ministry calculates.

"Even in that scenario, with a lot of driving and not good mileage on their cars and also paying for the heating of their houses, they'll still come out ahead," Finance Minister Carole Taylor told The Tyee.

As for the northern mayors, Taylor said there's no way they can be exempted from the tax.

"There are lots of people who would like exemptions," she said. "If you start down that path then you see why other areas around the world have just given up on the idea of pricing carbon."

Transport taxes: tale of two regions

Taylor said that, while upcountry transit may not match that in southern B.C., people in the Lower Mainland and southern Vancouver Island already pay extra gas taxes for services like SkyTrain.

Metro Vancouver drivers pay six cents a litre to fund transit while Victoria-area drivers pay 3.5 cents, she said.

"Already the Lower Mainland is paying far more than this carbon tax just to try and get our communities turned around toward less carbon usage," Taylor said. "If they are suggesting the Lower Mainland should pay 8.4 cents more for gas and the north nothing more, I don't think that would be fair to the people of British Columbia as a whole."

If people in the north would turn their thermostats down five degrees at night, the savings would be greater than their total carbon tax costs, Taylor said.

Benefiting the poor?

Mark Jaccard, a Simon Fraser University environmental economist and government adviser, said the carbon-funded tax cut should benefit low-income people overall.

Jaccard said he hasn't had a chance to do any detailed analysis. But looking at the specifics of the policy suggests four conclusions, he said in an e-mail.

"(1) Working, low-income people will be better off unless they commute (drive) about an hour per day in vehicles with large engines. This holds whether they are urbanites or rural inhabitants.

"(2) Non-working (hence no income tax) low-income people who do not have a car will be no worse off, but no better off.

"(3) Non-working, low-income people who do drive a fair bit (but I'm not sure how they could afford that with today's welfare levels) would be worse off.

"(4) High income people will almost universally be worse off (the only possible exceptions are high-income people who do not drive much and/or use electric space and water heating)."

These conclusions don't take into account the one-time $100 per person "Climate Action Dividend," the government has promised, Jaccard said.

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