B.C.’s new carbon tax has been characterized as everything from green camouflage for business handouts to the most important government policy since Tommy Douglas socialized medicine.
It’s revolutionary all right, but not in the way you might think. It’s part of a fundamental shift from income taxes to consumption taxes, one in which fuel tax is only a part.
For instance, those concerned about business subsidies may be interested to know that the Gordon Campbell government has just advised B.C. Hydro that its recent “rate rebalancing” plan is off. Hydro recently applied to the B.C. Utilities Commission to correct what it called a historic imbalance, by cutting business and industrial power rates while raising residential ones.
The B.C. Liberals are bringing in new legislation to control electricity rates instead. Expect that legislation to impose a punitive rate for home electricity hogs who exceed a certain consumption threshold. You can still expect the burden to shift to residential users, and not just because B.C.’s biggest electricity user is a mine and Campbell loves mines. Most of B.C.’s electricity is gobbled up not by industries but residential customers, just as most greenhouse gases come from our vehicles and homes.
Another new consumption tax is about to hit: B.C.’s newest toll bridge, the Golden Ears Bridge, is nearing completion. The twinned Port Mann will be tolled, and there is even talk of a London-style “congestion charge” for the privilege of driving into downtown Vancouver.
The NDP has protested loudly that the biggest industrial emitters are exempt from the carbon tax, which will add 2.4 cents to a litre of gasoline starting on Canada Day.
It’s true that “industrial” emissions from gas plants, cement plants, and aluminum smelters are exempt. It’s also true that B.C.’s top three carbon emitters are the Duke Energy natural gas plant in Fort Nelson (1.6 million tonnes in 2005), Rio Tinto-Alcan’s aluminum smelter in Kitimat (1.4 million tonnes) and the Lehigh Cement plant in Delta (just over a million tonnes), followed by the Lafarge cement plant in Richmond and Burnaby’s Chevron refinery.
But note that emissions from Metro Vancouver traffic that year were 5.5 million tonnes, more than the top three industrial sites combined. Also note that these plants have to pay the carbon tax on any fuel they buy. Industrial emissions beyond that will be subject to a cap and trade system, promised for this fall.
It’s been mentioned here before that however revolutionary B.C. is, it’s such a bit player on a global scale that it cannot possibly affect global warming. UVic climate scientist Andrew Weaver begs to differ, predicting that this incremental carbon tax policy will spread rapidly to the rest of North America.
I also spoke with B.C. Green Party leader Jane Sterk. With her main policy plank of a revenue neutral carbon tax stolen by the B.C. Liberals, she was soon reduced to attacking the shamelessly political $100 “climate action dividend” cheque the government is sending you in May as “Ralph-buck lite.”
NDP leader Carole James was stuck with complaining about transit fare increases. Whatever else this carbon tax is, it’s great politics. It pays voters, it vapourizes Greens and NDPers, and it quietly accomplishes a kind of tax reform that Stephen Harper has been reversing for cynical political gain with his GST cuts.
And history will record that Finance Minister Carole Taylor’s signature move was the signing bonus. The public sector union folks got theirs, and you’ll soon be getting yours, complete with “Best Place On Earth” logo on the cheque.
I’m sure you’ll join me in buying $100 worth of weatherstripping. Cheers.
Rural folks shafted?
It’s tempting to conclude that this policy is another burden for rural folks who drive greater distances for routine things like grocery shopping. But when you compare the amount of windshield time and gas spent by suburban commuters, that may not be the case.
If you’re a low-income earner in a rural area, you get a “climate action tax credit” of $100 a year per adult and $30 per child, which Taylor insists will more than cover your fuel tax even if you don’t change your habits.
If you’re a higher earner, new legislation will require the government to cut income tax by the amount of carbon tax it’s collecting.
The low-income tax credit will be enough in the initial years, but Taylor acknowledges the carbon tax will eventually have to go higher to meet the government’s lofty greenhouse gas targets.
Even in the short run, it’s another reason for country folks to consider moving into town.