So, You Say You Hate the Carbon Tax...

Hello there, people of the internet. The weekend is fast approaching, I am sitting in my office with a cup of tea, my puppy is sleeping at my feet, and the sun is shining outside my window in beautiful Vancouver, British Columbia. What better way to further brighten my day than to pen a post addressing the most hotly debated, most loved-to-hate (though rarely understood) environmental policy, the BC carbon tax! Some of my past posts have already earned me some death threats from the Billy-Bob-Whomevers of the internet with their pickup-truck-and-rifle Facebook profile photos, filtered with the confederate flag… and that was just for suggesting ‘Meatless Mondays’! Why not open a discussion on the poster child for misplaced policy-rage?

I woke early this morning and found myself perusing the dismal intellectual abyss that is the Facebook comments section (I know, I know, I couldn’t help myself). In particular, it was the comments section of a recent article instructing Vancouverites to brace ourselves for the coming swell in gas prices over the next few weeks.

GASP – could it be, that our already bloated fuel prices are set to climb even higher?! I know that I, for one, filled up the other day at $1.57/Litre and felt slightly yet immediately nauseous. How much more can we take? Where can we place the blame?!

That frustration is justified. I am right there with you all, griping about pump prices until the day arrives when I can afford a plug-in-hybrid or fully battery-electric vehicle (perhaps that day may be somewhat closer now thanks to the recently announced federal incentives program, but that is another discussion for another time). What I absolutely cannot get behind, though… and you shouldn’t either (!)… is the misplaced energy directed at a pioneering and elegant climate policy established here over 10 years ago with the sole purpose of saving our earthly asses.  

Call me a sucker for punishment but I can’t go another day without commenting on this widespread assertion that the carbon tax is a crippling, evil, unnecessary burden that exists to fill the pockets of greedy politicians. This rhetoric is equally as common as it is false. Let’s dispel a couple of prevalent myths here before deciding that you do, in fact, hate that notorious tax.

Myth #1: The carbon tax fills the pockets of politicians

This is a VERY important yet shockingly misunderstood point.

British Columbia’s carbon tax was designed to be revenue-neutral. This means that when Gordon Campbell introduced the tax in 2008, other provincial taxes were also decreased at the same time, by the same amount collected by the carbon tax, in order to offset it. So, what does that even mean?

This means that no influxes of revenue are going to the government. It goes back to the people. It ALSO means that as a direct result of the carbon tax, British Columbians have long-enjoyed the lowest personal income tax rate in Canada, and one of the lowest corporate tax rates among developed countries.

Oh, there’s also a ‘Climate Action Tax Credit’ that British Columbian individuals and families are eligible for, based on income. But I’ll get to that soon enough… the bottom line: politicians are not pocketing cash from the BC carbon tax, it’s regular people like you and I who are benefiting. What’s even better? The revenue-neutral carbon tax system can work federally, as well.

Myth #2: The carbon tax gets ‘jacked up’ whenever politicians want

This is a strange rumour that was spread around social media when Ontario was going through a recent provincial election. For some reason, all the way out in BC, I was seeing some pretty frightening yet utterly baseless right-wing smear campaigns trying to scare voters away from the “Ontario carbon tax scheme that’s as bad as the one in BC, where politicians jack up the price whenever they want”, so the ad said. [This is despite the fact that Ontario premier had never implemented OR proposed a provincial carbon tax. The attack ad seemed to entirely confuse the tax with cap and trade systems, but again, another post for another time.]

Gordon Campbell introduced the carbon tax here in 2008. In 2008, ‘Low’ by Flo Rida was at the top of the charts. I had braces. Let’s just say that this policy has been in place here for a little while. Anyway… the tax was introduced at $10 per tonne of carbon dioxide emitted, which translates to a cent or two at the pump. The tax then increased SLOWLY - $5 per year until 2012 when it reached $30 per tonne of carbon dioxide, and at $30 it stayed, as promised.

It wasn’t until 2018 when the province decided as part of its climate plan to increase the price to $35 per tonne, and, in line with the new Federal carbon tax coming into effect Monday, is set to increase to a final amount of $50 per tonne of carbon dioxide in 2022.  

This policy is elegant, and part of that elegance comes from this gradual step-increase that encourages fuel-switching and innovation of lower carbon technologies, while avoiding a harsh price increase on behalf of the consumer.  

Myth #3: The carbon tax doesn’t even work to reduce emissions

Politicians are fearful of implementing socially unpopular policies that could actually get us anywhere near our federal climate goals for fear of being politically ousted, and for a pretty damn good reason. If it’s not the public fretting about the T-A-X word, it’s automakers and other industry pushing hard against other regulations that could make a similar difference for emissions. So what are we to do?

Basic economics states that, as the price of a good increases, the quantity that society demands decreases. Basic economics also states that when a good (like fossil fuels) has a negative effect on society (ahem… air pollution, climate change, oil spills, planetary destruction), then that good needs to be taxed. By assigning a tax, we are simply putting a dollar-value on the damage that the good poses to current society and future generations, which in the case of fossil fuels is pretty catastrophic.

Seems simple, but does it work in reality?

In BC, our tax applies to the purchase and use of fossil fuels in British Columbia, and covers about 70% of all our greenhouse gas emissions. Again, the idea of the sloooow annual price increase is so that there is time for industry (ie. the ones actually paying the price on carbon) to adjust and innovate to find ways to lower their emissions. In economics this is called the ‘Polluter Pays’ principle, and it works. High-polluting industries see their bottom line suffering and over time, start making adjustments to tighten up their emissions and reduce pollution – first starting with the easy, cheap fixes, and then eventually moving up to more impactful changes like fuel-switching.

When BC first implemented its tax, it quickly saw a 5% decrease in provincial emissions. Sweden has seen a 26% drop in emissions since implementing its carbon tax in 1991. Non carbon-pricing provinces however have seen steady increases in emissions over the last decade.

Myth #4: The carbon tax is a burden to the middle and lower class

Another important point that often falls on deaf ears… the money that comes from the tax has always been re-distributed to British Columbians, but this is especially true for lower and middle-income households and rural communities. In fact, most low income families come out on-top when it comes to the carbon tax. 

Remember that ‘Climate Action Tax Credit’ I mentioned? This means if you are a lower income earner or family, (below $35k per year for individuals or $41k for married couples), you probably receive a cheque in the mail four times a year for around $150, which is set to increase to nearly $200 in the next couple years, in line with carbon tax increases.

The rebate program is based on income, whereby lower income households benefit the most and wealthy high-polluters shoulder the ‘burden’ of pollution.

Myth #5: The carbon tax makes gas unaffordable

British Columbia was the birthplace of North America’s very first broad-based carbon tax, and since the days of Flo Rida’s ‘Low’, we have been paying a price at the gas pump for this policy. How much exactly, though??

If you live in BC, you are currently paying less than 8 cents per litre (for a $35/tonne of carbon dioxide tax amount). Like I mentioned above, the federal price and BC’s carbon price will increase to $50 per tonne.

“$50 per tonne seems like a lot”, you say! Not really… That amounts to another two cents at the pump in BC. That is the beauty of a step-policy that slowly increases over time, it skips the sticker shock and allow society to adjust.

Also…Gas prices are far more complicated than most people think. I travelled across the city the other day and saw two gas stations with a 17 cent price difference. 17 cents in one day. I assure you, there are many more strings being pulled than you are aware of, and for far less noble reasons than the carbon tax.

There are various other policies in BC and throughout North America that are responsible for increasing the price of gasoline more drastically than the carbon tax as well. But hey, they don’t have the word ‘tax’ in them, so they’re pretty much safe from public discourse.

Myth #6: The carbon tax just doesn’t make sense

I will avoid diving off the deep end on this point, in an effort to keep this post a reasonable length (and to avoid several side-rants on policy evaluation criteria), but I will say this: The carbon tax doesn’t have to increase HOW MUCH you pay the government in taxes, it can simply shifts WHAT you are paying for.

Imagine a world where you and your family’s hard work and income (hello, positive contributions to society) is taxed LESS, while the toxic pollution that is choking the only home we have ever known (not so positive) is taxed MORE. Imagine that as a result of this simple tax-shuffle, the average person actually ends up saving money at the end of the tax year, with lower-income households benefiting the most while the highest-polluting wealthiest folks pay the price for their contributions to climate change. An idea so crazy it almost makes sense.

We have some fairly lofty climate goals in Canada and certainly need stronger policies if we wish to have any hope in achieving them. This doesn’t mean that Canadian citizens should to be the ones stuck with the bill though, while high-polluting industry laughs all the way to the bank. An aggressive revenue-neutral federal carbon tax is the best way to ensure that the polluters pay the price, not the people.

So march on if you will, angry Facebookers, continue wielding pitchforks and demonizing the best solution we currently have to justly fight carbon emissions. Be sure to continue ignoring any other carbon pricing policy affecting your wallet that simply doesn’t include the word ‘tax’, though. The climate policies will still roll out one way or another, even if the war wages on against the ‘T’ word. Regular citizens will end up paying far more and for far longer, but at least I won’t have to watch it unfold over Facebook.