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Out of one pocket, into another B.C. claims carbon tax will put it ‘out front’ in Canada, but plan woos voters with offsetting tax cuts, credits; producers exempt Gary Park For Petroleum News
British Columbians are going to be the first North Americans to be taxed for a government program to reduce greenhouse gas emissions.
But whether they’re actually going to pay the price is an open question.
Finance Minister Carole Taylor, decked out in a green two-piece suit and green pumps for what she called a “green budget,” eagerly proclaimed that the continent’s first attempt to impose a consumer-based carbon tax is an “important turning point for B.C. and Canada.”
However, in the same breath that she was rolling out plans to collect C$1.85 billion in carbon taxes over the next three years, Taylor was declaring the whole exercise to be revenue neutral, announcing that the revenues generated would be returned to British Columbians through tax cuts and credits.
The plan targets a broad range of fossil fuels — including gasoline, diesel, coal, propane, natural gas and home-heating fuel making up 70 percent of total current greenhouse gas emissions — making it among the broadest and most comprehensive taxes of its kind in the world, Taylor said.
It will start at C$10 per metric ton of associated carbon, or carbon-equivalent, emissions, working out to 2.4 cents per liter at the gasoline pumps this year, and grow in annual C$5 increments to C$30 per metric ton in 2012, or 7.2 cents per liter of gasoline.
Consultants say emissions cut would be small The private consulting group of M.K. Jaccard and Associates, which is affiliated with Vancouver’s Simon Fraser University, suggests that in the absence of any other GHG reduction programs, the tax could reduce emissions by as much as 3 million metric tons of carbon dioxide equivalent annually by 2020 — a small fraction of the 40 million metric tons the province will have to eliminate to achieve its goal of a 33 percent reduction from 2007 levels by 2020.
For now, emissions from “industrial processes such as production of oil, gas, aluminum and cement, as well as landfills and other sources” will be exempt from the tax.
“More work is needed to determine whether emissions from other sources should be subject to the carbon tax,” the government said.
Pending approval by the British Columbia legislature, the tax is expected to raise C$1.85 billion over its first three years — an amount that will be returned through income and business tax cuts and credits.
To avoid a public outcry, the government will also mail out one-time checks of C$100 this June to every B.C. resident, as an incentive to make energy-saving changes, but how the money is spent will be up to individuals. Low-income families will receive an annual “climate-action credit” of C$100 per adult and C$30 per child.
Tax cuts — including a lowering of corporate tax rates this year to 11 percent from 12 percent and possibly to 10 percent within three years — will see C$784 million of the carbon tax returned to individuals, C$395 million to low-income families, C$415 million to corporations and C$255 million to small businesses.
Business to pay 2/3, get 1/3 back The bottom line is that residents will pay an estimated one-third of the carbon tax and get two-thirds back, while the reverse will apply to the business sector.
In addition, Taylor said the province plans to unveil a cap-and-trade system this summer allowing large emitters of GHGs who exceed fixed targets to buy emissions credits from companies that operate below the limits.
In a skilful piece of political stick-handling, Taylor lined up a strong, broad-based coalition of support for the strategy, getting budget backing from the David Suzuki Foundation, the Mining Association of British Columbia, the Investment Industry Association of Canada and the Sierra Club of B.C.
The Canadian Association of Petroleum Producers welcomed a “broad-based” tax that will not penalize industry alone, while the Small Explorers and Producers Association of Canada said the B.C. strategy will be the first test of how willing Canadians are to pay higher prices for fuels in the interests of lowering GHGs.
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