CANADA’S CARBON TAX: HOW’S IT SETTING IN?

A new poll proves the truth of the frequently repeated mantra from cap-and-trade system advocates that a carbon tax might be a better tool to curb the greenhouse gas emissions (GhGs) that cause global climate change but it is politically almost impossible to sell.

A recent poll of British Columbians finds them very unsatisfied with being the experimetal subjects in North America’s first carbon tax trial. (The poll was published in Vancouver’s 24 Hours newspaper, essentially a tabloid, so it may not be a scientifically flawless study.)

The tax took effect July 1 and will undoubtedly require some getting used to if it is ever to succeed.

Finding: ~75% of B.C. does not believe the tax is "revenue neutral" though the province’s government went to great efforts to design it that way. (Revenues from the tax will be returned to the segments of the population hardest hit in the form of tax cuts.)

Finding: ~71% object to the government giving $100 rebates to initiate the tax program. (The initial rebates, an effort to prove it will be carbon neutral, totaled $440 million.)

Conclusion: The same people who don’t believe the measure is revenue neutral object to making it revenue neutral.

The real problem now: The tax increased gas pump prices 2.4 cents/liter. (That should make plug-in hybrid electric vehicles (PHEVs) an easier sell.)

The real problem going forward: The tax is progressive, will double in 2010 and will rise to 7.25 cents/litre in 2012.

And that’s based on a $30/tonne CO2e price. Many expect the price of GhGs to be far higher in the near future. One respectable estimate: To make a significant impact on emissions, the price of GhGs should be $75/tonne by 2020. That's going to mean MUCH higher pump prices.

Can’t wait to see how that polls - though bad polls will come with increased demand for PHEVs.

On the other hand, it could be interesting to do nothing and wait until Vancouver and Victoria are under water and THEN take a poll.

Sentiments are expected to shift dramatically when a cap is placed on GhGs and more businesses begin bearing the cost of their emissions.

For now, it is clear just how tough a sell a carbon tax is and how easy it is to attack.

(For everything on B.C.'s carbon tax: Tax Cuts, Funded by a Revenue Neutral Carbon Tax)

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Unpacking the carbon tax
Tom Fletcher, July 14, 2008 (Victoria News)
and
Poll: More anger over carbon tax
Sonia Aslam, July 15, 2008 (News 1130 AM)

WHO
British Columbia (B.C.)’s top university professors and tax advocates (Mark Jaccard, professor, Simon Fraser University; Kathryn Harrison, political science professor, University of B.C.); Carole James, leader, New Democratic Party (NDP); Stephen Harper, Canadian Prime Minister, Conservative Party

WHAT
A popular point of contention between B.C. carbon tax advocates and the B.C. populace is whether businesses and industry are carrying as much of the tax burden for funding the fight against global climate change as B.C. citizens are.

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WHEN
- North America’s first carbon tax grows stricter yearly for 4 years. In 2010, it will be twice what it now is. It will be twice that in 2012.
- The gas pump add-on for B.C. drivers is now 2.4 cents/litre and will progressively rise to 7.25 cents/liter in 2012.

WHERE
- British Columbia is Canada’s western-most province.
- Some charges to businesses will inevitably be passed on to consumers.
- Some businesses will do much better than they would with GhG caps. (Ex: Spectra Energy has 4 natural gas refineries and will get all its fuel from itself at cost with no charges for GhGs. Only emissions caps will deal with that.)

WHY
- The poll gave B.C. citizens the opportunity to make it clear they think oil companies and big industrial GhG generators should be paying a larger portion of the price in the fight against global climate change.
- Myth: Industry gets off easy with the tax. Truth: Industry will pay ~70% of the total tax revenues. (Ex: Cement plants get allowances on some emissions, other of their activities are emissions intensive and cost them.)
- Myth: Individuals pay the larger part of the taxes. Truth: Individuals, especially low income individuals, will get 2/3 of the revenues.
- The unpopularity of the tax has created an unlikely alliance of interests between the New Democratic Party (NDP), Canada’s greens, and Canadian Prime Minister Stephen Harper’s Conservative Party.

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QUOTES
- Carole James, leader, NDP: “[Oil companies and big industrial GhG emitters are] getting off easily while we pay…”
- B.C.columnist Tom Fletcher: “B.C. has always led Canada on environmental issues, and it’s proving it again by making the leap to carbon prices while maintaining a generally low-tax environment for business.”