Thursday, April 17, 2008

Carbon Taxes and the Green Party

The Green Party of Canada is determined to wean nation from fossil fuel addiction.

Quebec's carbon tax level is minimal, if "every journey of a thousand miles begins with a single step," the Quebec carbon tax could prove significant. In Feb. 2008 British Columbia announced a revenue-neutral carbon tax that qualifies as a giant second step. As reported in Canadian Press, the carbon tax will start on July 1, 2008 at a rate of $10 (Canadian) per metric ton of carbon dioxide, and will rise by $5/tonne annually to reach $30 per tonne of CO2 in 2012. The carbon tax revenues will be returned to taxpayers through personal income and business income tax cuts, according to BC finance minister Carole Taylor, who spearheaded the push for the tax.

Taylor estimates that the BC carbon tax will equate to an additional 2.4 cents (Canadian) on a litre of gasoline, or 9.1 cents Canadian (9.2 cents U.S.) per gallon -- triple the level of the Quebec carbon tax. Moreover, the BC rate itself is set to rise by $5/tonne annual increments until it triples, to $30/tonne, by 2012. At that point the tax will equate to 7.24 cents per litre of gasoline and 8.29 cents per litre of diesel, making it roughly eight times as large as Quebec's tax.

The first 40 pages of the 200-page BC Budget and Fiscal Plan, dated Feb. 19, 2008, spell out the rationale, impacts and mechanics of the British Columbia carbon tax, including the revenue return provisions. These materials are essential reading for any carbon tax advocate seeking to master not only the details of carbon taxing but communication tools for making a carbon tax palatable to the public. We also highly recommend Alan Durning's March 13 Gristmill article, which usefully parses four principles embodied in BC's carbon tax: revenue neutrality, phased implementation, protection for families, and broad coverage.

In mid-2007 we reported that Canadian Green Party leader Elizabeth May was calling for a nationwide tax of $50 (Can.) per tonne of carbon, with the level doubling in 2020. Allowing for the nearly 4-fold molecular-weight ratio of CO2 to C, the British Columbia carbon tax will meet the Green Party's goal in mid-2009.


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