The government of British Columbia has introduced the first real carbon tax in Canada. While I am no hardcore believer in climate change science and an am advocate of adaptation instead of “re-engineering” the atmosphere, I must congratulate Gordon Campbell and his government for taking this step.
If one believes in climate change and believes that we should reduce emissions of greenhouse gases, then using price to induce a change is better than legislating caps or creating an artificial “market” for emissions credits.
The BC carbon tax isn’t perfect.
- It doesn’t apply to all emitters. It isn’t fair to the consumers who will pay extra for gasoline and diesel while industry won’t face the same levies.
- The levy is not high enough to actually change behaviour. $10/tonne CO2 equivalent amounts to 2.6 cents per litre on gasoline. Even with the promised increase to $30/tonne in 5 years only increases the cost of gasoline by 7.5 cents per litre. Consumers have experienced much more significant increases in gasoline prices in recent years due to rising oil prices, and there has been little decrease in consumption. If they really want to impact consumption of energy the tax on emissions would need to immediately rise to $100/tonne or more (26 cents per litre). Industry could actually capture CO2 emissions at a price lower than this, making it economic to avoid such a tax.
The one aspect of the BC carbon tax I do like (but am concerned about) is the promise to keep it revenue neutral by reducing other taxes (such as income taxes). I fear that governments of all stripes are loath to give up taxing power (and subsequently spending power) in their quest to “fix” society. I fear that a future BC government (would raise income taxes or sales taxes while also raising carbon taxes, and increasing the footprint of government. This will erode economic growth and will make the people poorer.