Post on 24-Dec-2015
British Columbia’s Carbon Tax Shift: Design and Implementation Challenges
Tom Pedersen, University of Victoria
and
Stewart Elgie, University of Ottawa
Latin American Carbon Forum, Bogota, September, 2014
The BC Carbon Tax: Key Design Points • Accelerating:
• July 1, 2008: $10 per tonne of CO2 emitted rising $5/yr to $30/t in 2012 (now frozen)
• this provision appears to have changed behaviour in BC
• Revenue neutral (in fact, it’s revenue negative, since Year 1): • every penny goes to reductions in other taxes• now irrevocable, as income taxes would have to rise
substantially if the tax was repealed
• Fair: • tax reductions and supports focused on lower income strata
• Simple: • the tax is applied at wholesale distribution points (six such
points in BC). Thus, no additional bureaucrats needed.
• Carbon tax rate is based on carbon content of fuels. Rates as of July 1, 2008 and July 1, 2012, calculated on the basis (for 2012) of $30 (CAD) per tonne of CO2 equivalent emitted.
• Revenue neutrality – tax shifting, not imposing:• no opportunity to claim “just another government tax grab”.
• Competitive disadvantage:• remains an issue since most trading jurisdictions have not
followed BC’s lead (unexpectedly, as of thinking in 2008).
• Politics: • centre-right “BC Liberal Party” was re-elected in 2009.
Captured environmental vote when the left-centre party campaigned with, “Ax the tax!”. Re-elected again in 2014.
• Economic stimulation:• cleantech is one of the fastest growing economic sectors in BC
(as of 2012).
• Communication with broader society is a must:• tax shifting remains poorly understood in BC.
Implementation Issues, Positive and Negative
www.pics.uvic.ca
Prof. Paul Ekins, Chair of the UK’s Green Fiscal Commission:
“BC’s carbon tax is a template for the world.”
Per capita fossil fuel consumption, 2000-2013
Rest of Canada
British Columbia
July 1, 2008
19%
July 1, 2012
Data compiled by Stewart Elgie, University of Ottawa
Tera
joul
es p
er c
apita
British Columbia’s Economic Performance: % Change in GDP (f = forecast)
CanadaBritish Columbia
Chan
ge in
GD
P, %
Statistics Canada data; graph compiled by Stewart Elgie, University of Ottawa