Carbon tax just another cash grab

It is becoming clearer by the day that B.C.’s carbon tax is not working as originally promised.

When then-premier Gordon Campbell introduced the levy in 2008, his government assured us it would be revenue neutral — all of the money raised would be given back in the form of income tax cuts.

Campbell evidently felt resistance could be muted by assuring the public this wasn’t a scheme to fatten the treasury. Yet to a considerable degree, that is what’s happened. When Christy Clark took over, she began the retreat, then, after the NDP was elected in 2017, revenue neutrality was abandoned.

Currently, the tax raises in the neighbourhood of $2 billion a year. Of that, only $235 million was returned in income tax cuts during 2018, and $252 million in 2019.

This amount was increased by a one-time payout of $500 million in 2020, to bolster COVID-19 relief.

Nevertheless, on an ongoing basis, a fair assessment is that only about one-eighth of the money raised by the levy is being returned directly to taxpayers. Premier John Horgan’s government argues some additional funds raised by the levy go to help businesses reduce their carbon emissions.

That may well be beneficial, but it is not what was promised.

Basically, his government has scooped the cash and added it to general revenue.

Second, the picture is further complicated by the federal government introducing a carbon tax of its own. In 2017 the new levy was set at $20 per tonne in 2019, rising to $50 next year, and $170 by 2030.

Like Campbell, Prime Minister Justin Trudeau dealt with the anticipated political blowback by promising most of the funds will be rebated to consumers. But will future governments abide by this commitment?

As well, Trudeau had to deal with the reality some provinces already had carbon taxes, while others either had none, or had lower rates than the federal scheme.

Provinces with taxes at the $50 federal rate would be exempt from his levy. In those with partial rates, the federal tax would be added incrementally to bring the combined rate up to the $50 level.

But that has uneven consequences for taxpayers.

If a province has no carbon tax, like Alberta, the $50 federal levy will apply, and Albertans will get Ottawa’s full rebate.

If the province has a tax, but at a rate lower than $50, local taxpayers will get only a partial rebate.

And in provinces such as B.C., where our tax rate is already $50, we will get no federal rebate at all.

There are several lessons to be learned here. First, while governments often introduce taxes to meet laudable objectives, the lure of additional revenues eventually proves hard to ignore.

Second, if reducing CO2 emissions were indeed the intent, there would be no need for B.C. to persist in its carbon tax scheme.

Both the provincial and federal tax reach the same result.

Environmentally, it makes no difference which tax is applied, since one cancels the other out.

However, from a taxpayer’s point of view, the federal scheme is more attractive, since Ottawa is offering a substantial rebate, while the B.C. government has reneged on that.

The carbon tax, while admirable in principle, will go down in history as just another cleverly disguised cash grab.