BC’s Carbon Tax Takes the Gold

February 25, 2008

It looks like British Columbia is a few steps ahead of Washington State’s push toward a carbon tax.  BC’s Finance Minister, Carole Taylor, introduced an escalating carbon-tax just a few days ago.  Starting on July 1st, the tax will add an extra 2.4 cents for every purchased liter of gasoline (that’s about 9 cents a gallon).  The tax rate will escalate annual until 2012, when the tax will stop at 7.2 cents / liter (about 28 cents a gallon). 

Compared to the carbon-tax proposed in Washington State, the rates are relatively the same.  So what makes this tax so much better?  

First off, BC’s carbon tax bill isn’t all bite, and isn’t completely insensitive toward consumers.  “We want to bring in the benefits first,” said Taylor. “We made a policy decision that it was an important part of this carbon tax that individuals were protected as we start out on this journey.”  The benefits will be coming by way of a one time $100 check in the mail.  The cash will (hopefully) help individuals adjust to a lower carbon producing lifestyle.   

Secondly, the tax has managed to by step an important criticism.  A gas tax is often seen as regressive, by placing an ever-growing burden on the lower and middle class.  The BC carbon-tax is different.  The money made from the tax will be funneled right back to consumers by means of lower income taxes.  Some qualifying families will also receive $100 annual offsets throughout the program.  This system makes the tax “revenue-neutral”, so even the government isn’t profiting. 

Despite all this, BC’s carbon-tax bill misses an important objective.  It’s great to see that the government wants “to bring in the benefits first”.  But a one time check isn’t the type of benefits that will advance an environmentally-friendly lifestyle.  Wouldn’t it be better to send out “convert your car to bio-fuel” coupons instead of $100?  Or use the money to build decent commuter bike lanes?

Even more importantly, the bill doesn’t really stimulate a change in behaviors.  At the end of the year, the costs for BC consumers balance out.  Without added costs and without any extra incentive to change, why would anyone change their habits at all?   

Regardless of its downfalls, this bill is a huge political success.  Historically, many politicians are hesitant to support a carbon-tax for fear it may be career damaging.  BC’s new tax is proof otherwise.  United States – it’s time to catch up!


2 Responses to “BC’s Carbon Tax Takes the Gold”

  1. Jurgen Hissen said

    Of course there’s an incentive to change. It’s the same incentive at play anywhere. Do X and you get $$. Burn less fuel, and you get to keep more $$. Why would a carbon tax be any different?

    Coupons to convert the car to biodiesel might be great for some people (certainly the biodiesel industry). But if an individual’s circumstances would allow him to save more fuel by telecommunting or by ride-sharing with their spouse than by converting their car to biodiesel, why should the government tell them the only thing that qualifies as “green” is to convert your car to biodiesel? This is textbook inefficient central planning. Let the individual decide how best to avoid paying the carbon tax.

    I can’t [under]stand this fascination with improving fuel economy of vehicles. Burning no fuel is not what cars do. Cars get you around at a cost. There ARE alternatives to the single-occupant vehicle commute-daily-from-the-burbs lifestyle. I carpool and take the bus home. In the summer, I ride my bike. I bought a smaller house closer to work.

    I had an amusing exchange with a prominent politician in Canada where they claimed that carbon taxes were bad because they were not the most effective way of improving vehicle fuel efficiency. The reason: because instead of driving consumers to get more efficient vehicles, carbon taxes might instead just drive consumers to find other ways of getting around. And this was a “problem”.

    Sadly, in this debate, the cart is getting planted firmly before the horse.

  2. Nicholas said

    Unfortunately, alternatives to a daily commute are not always accessible. Carpooling, busing, and biking are not options for me (and for most). Seattle would need to spend a fortune on bike lanes and completely revamp its public transit before either option is safe and time-efficient.

    The government needs to make these green options accessible. Once there are options, individuals may choose the one that best fits their lifestyle.

    Leave it completely up to the individual, and I doubt any change will happen. Of the $100 checks being sent off to BC citizens, I’d bet that most of it goes to every day costs, and not toward lifestyle changes.

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