Those of us concerned about ever-increasing carbon emissions and imminent climate collapse are horrified by Premier David Eby’s apparent abandonment of the carbon tax.
Introduced here in B.C. in 2008 by former premier Gordon Campbell, this tax has proven not only to be very effective at reducing carbon emissions but also has done so without negatively affecting economic growth.
Equally important, right from the start the provincial government mandated that the carbon tax be revenue neutral for B.C residents and businesses. We collectively received back all the money collected.
One of the best articles I have read on the value of the carbon tax was written by University of Victoria professor emeritus Thomas F. Pederson and published in Business in Vancouver on November 16th 2024. Titled ‘History tells us that axing the carbon tax is a truly bad idea’, Pedersen’s commentary argues that the carbon tax eases the economic burden for B.C. taxpayers while effectively lessening climate impacts. Specifically, he recounts that:
- At the same time in 2008 that the Campbell government introduced the carbon tax, they reduced personal income tax rates, followed by a further reduction for lower-income earners in 2009.
- Corporate income taxes were reduced in stages from 12 per cent in 2008 to 10 per cent by 2011.
- The tax rate for small businesses fell to 2.5 per cent from 3.5 per cent on December 1, 2008, a notable net decline of 29 per cent.
- On July 1, 2008, low-income families began receiving direct quarterly cash carbon tax rebate payments.
- All these tax reductions and support measures were fully funded by carbon tax revenues. Significantly, personal and small-business tax rates have never increased since 2008, while cash payments to low-income families are now higher than they have ever been.
- For most taxpayers, B.C. continues to have the lowest personal income tax rate in Canada.
B.C.’s carbon tax model is acknowledged worldwide for its outstanding success, including by the World Bank, which published a blog by Stewart Elgie, Professor of Law & Economics at University of Ottawa and Chair of Sustainable Prosperity; Ross Beaty, Chairman of Pan American Silver Corp. and Alterra Power; and Richard Lipsey, Professor Emeritus of Economics at Simon Fraser University, praising its environmental and economic success.
What those now critical of the carbon tax, such as federal Conservative leader Pierre Poilievre and BC Conservative leader John Rustad ,have failed to point out is that while eliminating the charge will reduce direct purchase pricing, doing so will lead to higher taxes and eliminate very significant wealth transfers that put equal or more amounts of money into the pockets of British Columbians.
Pederson’s article notes that in 2017 NDP premier John Horgan’s government unfortunately erased the legislated requirement to return every penny of carbon tax revenue received to taxpayers via tax reductions and direct cash payments. Rather than now abandoning the tax, Pedersen argues that B.C. should keep the levy and reinstate the requirement that it be revenue neutral.
In his words, “From 2025 on, Eby could redirect every penny of new revenue generated by annual increases in the carbon tax toward increasing direct cash returns to low-income citizens while reducing, every year, personal, small business and corporate income tax rates. ….. If Eby was to do this, it would curry wide favour among environmentally oriented voters in B.C. Mind you, heeding history, he would need to communicate his reinvigorated revenue-neutral program clearly, consistently, and frequently.”
I agree with Pedersen. If we want to reduce carbon emissions without negatively affecting the economy and at the same time transfer wealth from higher income individuals to lower income individuals, we should be increasing the carbon tax, not eliminating it.
As Pedersen says, “Premier Eby should throw “axe the tax” where it deserves to go: Into the dustbin of truly bad ideas.”
Daily atmospheric CO2 [Courtesy of CO2.Earth]
Latest daily total (November 25, 2024): 424.48ppm
One year ago (November 24, 2023): 421.47ppm
Subscribe to Tim Louis
Keep up to date Tim's latest posts.