Barry Dorval
Focus on Climate
Spike the hike, axe the tax. That’s what some politicians are pushing. But is dumping the carbon tax smart?
To answer that question, we must first answer: Why was this tax started? How does it work? How effective has it been? And what are the downsides?
In B.C., Gordon Campbell’s Liberals initiated North America’s first carbon tax in 2008 to fight climate change. Because climate change is driven primarily by fossil fuel consumption, government incentivized citizens and businesses to reduce their GHG emissions by making fossil fuels more expensive.
Citizens and businesses pay a tax on fossil fuels. These tax revenues are then used in several ways: lower and middle income folks receive payments to offset the cost of the tax, money is directed to low carbon transportation and heating alternatives (e.g., funding for mass transit and rebates for electric vehicles and heat pumps among many other investments), and businesses are supported to improve energy efficiency and to adopt fossil fuel energy alternatives.
That’s the theory, but what’s the reality?
Does the carbon tax reduce GHGs?
The answer is remarkably clear: yes, in terms of reducing GHGs, B.C.’s carbon tax has been very successful. Since 2007, per capita CO2 production in B.C. has fallen from 14.9 tonnes of CO2/person to 11.7, a drop of 21 per cent. We’re not there yet, but we’ve made good progress.
According to Dale Beugin, carbon pricing expert and executive vice-president of the Canadian Climate Institute, “After 15 years, the B.C. carbon price is the gold standard in cost-effective climate policy.”
So, the carbon tax reduces GHGs – but at what cost? Politicians who use the carbon tax as a club to beat their opponents would have us believe that this tax is destroying Canada by worsening the affordability crisis.
The reality? University of Calgary economists Trevor Tombe and Jennifer Winter conclude that “climate policies are not a significant driver of the rising cost of living. Nor will removing policies such as carbon pricing materially improve the situation. The latest estimates from Statistics Canada suggest carbon taxes increased the average cost of food by about 0.33 per cent relative to what it would be in the absence of carbon taxes. That’s the entire effect.” Thirty three cents for every $100 spent on food!
Yes, policies inevitably create winners and losers. Middle and higher income folks (the ones who are responsible for the bulk of citizen-based emissions) who won’t lower their use of fossil fuels will pay more. Businesses that don’t reduce their fossil fuel use (even though government provides funding to do so) will also lose. And those who reduce their fossil fuel use will come out ahead.
But here’s the thing – going back to burning fossil fuels as if there were no climate cost is delusional. If British Columbians don’t find ways to generate less CO2, we will all be losers. Axe the tax? No. Act now to stop climate change!
Barry Dorval is with Climate Action Now! North Okanagan
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