Believe it or not, dear readers, I don’t think this thing is a thoroughgoing disaster:
Here’s the deal:
- Revenue-neutral carbon tax (starting July 1, 2008) intended to make people burn less fossil fuel
- $10/tonne-of-greenhouse-gas tax on hydrocarbon fuels, including gasoline, diesel, and home heating oil
- That’s about $0.024/litre on gasoline
- Tax goes up $5/tonne per year until it hits $30/tonne in 2012
- Personal and corporate tax cuts (in 2009) to offset the extra revenue
Now, first of all, I don’t think for a minute that this’ll make people drive less. Higher gas prices will probably convince some people to buy cars with smaller engines, but for the most part I think people will just spend more money on gas than they used to. (After all, money doesn’t really mean anything any more.)
Speaking of money: business tax breaks or no, this will surely drive up prices. Higher transport costs will hit businesses in July 2008, but they won’t start to see tax savings until they next file (which is, what, April 2009? Revenue Canada’s website doesn’t want to tell me when corporations are required to pay taxes). Starting in late June at the latest, business managers are going to start looking at what their shipping companies think it’ll cost to resupply them and raising prices to compensate. Are they going to simply eat the extra cost under the assumption that they’ll be compensated for it in ten months (April 2009)? I doubt it. When April 2009 comes around and their taxes go down, are they going to lower prices accordingly? I doubt it.
So, prices on staples of modern living like food, gas, beer, and LCD televisions will go up. As usual for sales taxes, this will hit poor people harder than rich people. C’est la vie when you let government set the rules. (As you might suspect, the local New Democrats are already raising a storm:
Apparently, the problem is that large corporations aren’t being given enough cause to raise their prices.)
Now, here’s where things get interesting. Air pollution from burning hydrocarbons (or anything else) is basically an external cost — someone else has to clean up your mess when you light shit on fire, but you don’t pay for it. You have no immediate incentive to lead a greener lifestyle, because you don’t have to pay for the consequences of your lighting-shit-on-fire.
Carbon taxes, in theory, make you pay for it.
In this case… well, not exactly. The province won’t end up with more money to plant trees (or whatever it plans to do to grab CO2 out of the atmosphere and make it more useful), because the carbon tax is meant to be revenue-neutral.
Basically, then, this is a mildly interesting theoretical development which will probably have fuck-all real effect on emissions, will probably make my food and beer more expensive, and has a slim chance of leading to a slightly stronger local economy (what with the decreased tax burden on local employers).
As I mentioned, not a thoroughgoing disaster.
Carbon tax is just a tax grab, disguised in green. The fact is as you said, people will continue driving as usual, and businesses will just pass on the cost to the end consumer. For a government that reaped the benefits of tax cuts to stimulate a robust BC economy, this about face leaves me very concerned that Campbell indeed has lost his collective mind. The 90’s proved that regressive tax regimes do not work, and in fact, hinder the economy.
The bottom line, is a compraison to alcohol consumption. Taxes on our libations are excessive, yet, increased taxes have not decreased alcohol consumption whatsoever. Given that gas is a much more vital commodity to our everyday lives, I see no way that any carbon tax will decrease consumption. Costs will just be passed on the end consumer, as usual. Let’s hope that as Carole Taylor rides off into her CBC sunset, that her policies disappear with her, and this government regains its senses after the next election. As for me, I’m planning a long fishing trip for that day.
Good comparison with boozeahol taxes.
If the provincial government does indeed follow through with its personal and business tax cuts, I don’t see this as a “tax grab” — it’s mildly inflationary but otherwise revenue-neutral. Our new carbon tax is many things, most of them unflattering, but I don’t see it as a revenue source.
Actually, the more I think about it, the more it looks like window dressing. “Look at all the environmentally friendly laws we’ve been passing!” At least it’s not wasting as much of my money as Campbell’s grand transit plan.
Agreed, it has all the hallmarks of green window dressing, designed to marginalize the attack dogs of the NDP enviros come election day. My beef with this, is that at some point in the future, a government will likely take this tax, and increase it, and siphon off the extra windfall to their own nefarious(wasteful) needs. Governments have poor track records with overage accounts (EI, hydro surpluses, ICBC profits) so, count me as a cynic.