Carbon tax: tell us the full story

There is mounting evidence that Premier Clark and her cabinet have an exceedingly low opinion of the intelligence of B.C. voters. Why else continue to make statements that informed voters are unlikely to believe. Her recent statements around the question of a carbon tax are a case in point.

BC first imposed a carbon tax at $10 a tonne back in 2008 and then raised it by $5 each year until 2012 when Clark froze it at $30.

The tax applies to the purchase or use of fuels in the province, and covers about 70 per cent of B.C.ís total emissions. A central feature is its revenue neutrality. This means that every dollar generated by the carbon tax is returned to British Columbians through reductions in other taxes.

You will no doubt recall that the provinces, territories and the federal government gathered in December to set a framework for the pricing of carbon emissions.

The Trudeau government announced in the House of Commons its intention to impose a national carbon tax in 2018 unless the provinces came up with some other means of limiting carbon emissions.

Clark went to the meeting with the position that there had to be an equivalence between the price paid for carbon emissions in Ontario and Quebec under their existing cap-and-trade system and the straight carbon tax in B.C.. Unless such equivalence exists, she opined, the western energy-producing provinces will be paying for the cheaper price put on carbon in the eastern provinces.

She ignored the fact that provincial sales and income taxes vary across the nation, basing her argument on the flimsy reason that the carbon tax was going to be a national tax.

Premier Kathleen Wynne of Ontario dismissed Clarks argument by saying the objective was to reduce emissions and a carbon tax was only part of the answer.

Clark had and continues to have a problem with the issue. The exemption of the carbon tax for 30 per cent of B.C.’s emissions is causing the province to fail to meet our targets for reducing greenhouse gases.

Clark said in an interview on March 5 with the CBC that this failure is proof of how hard it is to meet reduction targets and that perhaps “we should try and contain our enthusiasm for reaching even further.”

At the meeting in Ottawa, she seemed to also hint that the federal government was dictating to the province.

She subsequently walked out of the meeting saying she could not sign any agreement unless there was an independent evaluation of the equivalency between capand-trade and the straight emissions tax. The feds then agreed to such a study in 2020 when the federally set rate would equal the level of the B.C. tax.

Most economists, me included, think Clark’s argument is a red herring. If she really believes that the cap-and-trade system is less onerous, the Liberal government is free to implement that scheme in B.C., but they won’t because it would wind up costing B.C. taxpayers more than the current tax.

She doesn’t want to do that because total emissions in BC are growing much faster than they are in the rest of Canada and cap-and-trade for B.C. would have to include the 30 per cent now exempted.

The fact remains that the price levied on carbon in each province is the result of policy choices made by each provincial government (their jealously guarded prerogative).

Since 2008, B.C. has had a carbon tax while the others did not. So why make a fuss now about the supposed unfairness of other systems?

She is perhaps trying to deflect attention to the fact that freezing the carbon tax in 2012 has resulted in making B.C.’s emission-reduction targets unachievable.

The Liberal government’s desire to avoid a tax increase or any action that might endanger their re-election is apparently more important than the environmentís continued degradation.

David Bond is an author and retired bank economist. Email: curmudgeon@harumpf.com.