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BC's Carbon Tax Doesn't Work

As gas prices go up, pollution does too. Time to fix it.

By Bill Tieleman 12 Jul 2011 | TheTyee.ca

Bill Tieleman is a regular Tyee contributor who writes a column on B.C. politics every Tuesday in 24 Hours newspaper. E-mail him at weststar@telus.net or visit his blog.

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Carbon tax on track to add 6.67 cents to every litre.

"The carbon tax alone could cause a reduction in B.C.'s emissions in 2020 by up to three million tonnes of CO2 equivalent annually." -- B.C. Ministry of Finance website.

If the intent of the B.C. Liberal government's three-year-old carbon tax was to reduce gasoline consumption and greenhouse gas emissions, it's been a smoking wreck on the highway.

The carbon tax puts an additional tax of 5.56 cents per litre onto the already high price of gasoline, which includes many other federal, provincial and municipal taxes.

The gas tax went up another 1.1 cents a litre on July 1 -- with the intent of persuading consumers to reduce gasoline consumption.

It also applies to home heating fuels, natural gas and other petroleum products.

But there are a few problems. First, the carbon tax isn't working.

Statistics Canada figures tell the gassy tale of woe.

In 2010, B.C. motor gasoline sales were 4,695.7 in thousands of cubic metres compared to 4,529.8 in 2008 -- the first year the carbon tax started, on July 1.

There are many other factors that affect gas sales but one thing is clear -- selling more gas each year means greenhouse gas emissions are going up, not down.

Doesn't fund green improvements

Why the carbon tax isn't reducing consumption is simple. Increasing the price without providing drivers with more options on how to reduce their use of fuel doesn't work.

The B.C. carbon tax introduced with great fanfare by former B.C. Liberal premier Gordon Campbell is supposed to be revenue neutral, offsetting the increased cost of gas and other fuels with personal and corporate income tax cuts.

That means the nearly $1 billion in extra gas taxes annually doesn't fund public transit at all, nor does it provide financial incentives to buy more fuel-efficient vehicles, make your home more energy efficient or fund other environmental projects.

The second big problem is that the carbon tax is unfair, because it's a regressive consumption tax, like the Harmonized Sales Tax.

Lower and middle income British Columbians end up paying proportionately more of their limited budget on gas and heating fuel than wealthy people.

While there is a carbon tax rebate for very low income earners, the maximum personal credit is $115.50 and the personal income threshold for the maximum grant is $31,000.

That means the carbon tax makes you pay more than your fair share of the cost while you don't at least get the benefits of better public transit so you can leave the car at home to go to work, or get a tax break on buying a gas-miser vehicle with lower emissions.

How popular really?

Environmentalists went ga-ga in delirious joy when the carbon tax was introduced as the first in North America, hoping it would start a trend.

Instead, every other jurisdiction has rejected the idea and the federal Liberal Party's vaunted Green Shift plan for some form of carbon tax espoused by then-leader Stephane Dion in 2008 turned into a flaming electoral disaster.

Environmental group the Pembina Institute issued a news release optimistically titled "British Columbians support the carbon tax" just before the July 1 carbon tax increase citing a poll it commissioned that purported to show support for the controversial measure.

In fact, 33 per cent said the carbon tax has been "positive" for B.C. while 41 per cent said it was neutral. Another 27 per cent said it was "very negative" or "somewhat negative."

But the poll also shows that a majority -- 51 per cent of respondents -- do not want any further increases in the carbon tax after 2012's final 1.1 cent hike to 6.67 cents a litre goes ahead, while just 29 per cent support further gas and fuel tax increases.

The poll also shows that 49 per cent of respondents support using new carbon tax revenues for public transit, topped only by the 56 per cent who say use it for health and education.

That indicates the carbon tax could be fixed in a way most British Columbians would support.

But so long as it penalizes lower and middle income earners, not to mention northern and rural residents who simply have no public transit options at all but nonetheless have to pay the carbon tax, the reality is clear.

The carbon tax pledge is still a lot of hot air.  [Tyee]

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