My home province of Beautiful British Columbia just, on February 19, 2008, made history in North America by implementing the first Carbon Tax on fossil fuels this week. This tax is on all fossil fuels, gasoline, heating oil, natural gas, propane and diesel. This budget has been met with great enthusiasm by environmental groups, been rejected on the Federal level and sparked outrage in northern communities. So lets take a look at the budget and see what this is really all about and what we can expect in the coming years as the budget runs until 2012.
First lets take a look at the reasoning behind the tax. Carole Taylor, the Finance Minister said "The principle is simple, Tax carbon-emitting fuels to discourage their use, and give the money back to people, back to businesses, so they have control. They can make their own choices about how the tax affects them."
I am not really sure that this is as simple as she has stated.
You see the new Carbon Tax is revenue neutral to the Provincial Government. What that means is each dollar brought in will be rebated as tax reductions to individuals and businesses. The tax, being revenue neutral, one would assume that if consumption drops faster than expected, say due to the rise in energy prices that the tax relief will be adjusted accordingly, by that I mean the Government will not reduce tax rates as much as proposed. Revenue neutral means revenue neutral after all. This policy is implicitly stated in the budget, also the Government reserves the right to increase the per tonne price as well. So British Columbia will look like it has a better income tax rate, but overall tax burden will remain the same.
So we trade one tax for another, with no plan to address the rising energy burden, food costs and overall increase in cost of living as prices for fossil fuels continue to rise. Also the budget actually calls for a increase in consumption to fund it's tax reductions.
2008/09 Expected revenue 338 Million @ 10.00 per tonne = Emissions of 33.8 Million Tonnes
2009/10 Expected revenue 631 Million @ 15.00 per tonne = Emissions of 42.06 Million Tonnes
2010/11 Expected revenue 880 Million @ 20.00 per tonne = Emissions of 44 Million Tonnes
Just looking at these figures one can see that this is a not a Greenhouse Gas Reduction Initiative, it actually relies on an increase of consumption to be a viable balanced budget and to deliver on the promises of lower income taxes. If the reason for the tax is actually achieved, and remains revenue neutral, the reductions in income and business taxes will be re-instated or the Government will move into a deficit budget. This is in direct contradiction to the stated purpose of the Carbon Tax.
Carbon Tax or Cold Tax?
Rural British Columbia is on average 20C colder than the population centres of Vancouver and Victoria, plus they do not have very much in the way of public transit. These are the ranchers and forest industry workers that rely on fuels to stay warm and to earn a living. The gas company states on their web site that a home in Vancouver uses 56Gj of energy to heat for the year, the same home in in the rural areas uses 111Gj of energy or almost double. This means on a right of the pocket expense that rural residents will be paying double the amount of taxes. Since the tax is rebated through income taxes, everyone will get the same percentage reduction. This means that the urban population will benefit from the taxes paid by the rural population, additionally they have many more options for reducing their consumption. This tax is regionally biased and unfairly penalizes people not living in a population centre.
You Get Elected in the Cities
The only possible reason for this is that the politicians know that they liberal urban dwellers are the ones who can re-elect them next year. Plus they are the ones calling for the environmental action, so hence a tax system that favours them. This is political pandering in the worst way; first by using a tax that required more greenhouse gas emissions not less to be a viable for income tax reduction, then by shifting the burden onto the backs of rural residents that do not have the numbers to remove them from government in the next election in favour of the regions than can keep them in power.
I ask you the readers, "Does a tax that relies on increased consumption and emissions while unfairly taxes people due to regional climate be truly called a green budget?"