British Columbia is about to start a bold new era if Premier Gordon Campbell and those who support his new carbon tax are to be believed. The tax will begin to take effect July 1 and the provincial government is promoting the notion that it is revenue neutral -- that is B.C. will not profit from the change, only the environment and those who choose to reduce their carbon footprint. It's a promise that doesn't ring true. When the GST was introduced it was billed as being revenue neutral. Instead, it was used to collect billions of additional monies from Canadians.
Premier Campbell's carbon tax -- it applies to fossil fuels such as gasoline, diesel, home heating fuel and natural gas -- starts at $10 per tonne on July 1 and goes up by $5 each year to $30 per tonne in 2012. At the gas pump, the tax starts at 2.4¢ a litre and rises to 7.2¢ by 2012. The goal is to reduce emissions by 33% from 2007 levels by 2020. In theory, the carbon tax will manipulate people into using less fossil fuel, but ironically, the Premier's own behind-the-throne carbon tax guru, Mark Jaccard, suggests people's behaviour won't change until the carbon reaches $180 per tonne. That translates to a 43.2¢ per litre tax increase at the pumps.
To make the carbon tax revenue neutral, the B.C. government is promising to offset it using individual and business income tax reductions. But those reductions still remain opaque. What is clear is the knowledge that the carbon tax will reach much farther into the pockets of British Columbians than first understood. Municipalities and businesses will pay the carbon tax and both will pass along the increased cost through higher property taxes and increased prices on goods and services. The province has not included these costs in its calculations.
Some municipalities in northern B.C. have calculated the impact this carbon tax will have on property taxes and the result is worrisome. In Williams Lake, for example, the mayor's office calculates the property tax increase for citizens will be an extra 1%. Mayors in northern towns have banded together to fight the carbon tax, but have been told straight out by B.C.'s finance minister that no exceptions will be made.
Business will pay the lion's share of the carbon tax. Of the $1.85-billion the government expects to collect from the carbon tax over the next three years, about 70% of that will come from businesses, yet businesses will only receive 30% of the proposed tax cuts. Individuals, on the other hand, will pay 30% of the cost and receive 70% of the tax cuts.
That may play well politically for the moment, creating the illusion that individuals will soon enjoy a big tax break in B.C. But whatever the savings recouped through tax reductions, that money will be needed to pay for the higher costs of goods. Consumers will ultimately bear the increased cost Premier Campbell's carbon tax will impose on business.
For B.C.'s exporters, dependent on foreign markets, the carbon tax presents a new hurdle to competitiveness, one that workers in export industries will bear.
Most big industrial employers in British Columbia export their products and compete against companies that do not face carbon taxes. The forestry industry, already in big trouble, is a prime example, as is the mining industry. Both are among the highest paying industries in the province. For a large mine, the carbon tax could add up to $4-million per year in additional costs. On the ground this means the mining industry will be less competitive with international rivals, production will drop, as will carbon emissions and so will growth and with that comes fewer high-paying jobs.
Premier Campbell's carbon tax isn't a win-win for the environment and taxpayers. It will increase the cost of living for B.C. families, undercut the competitiveness of B.C. businesses and at the end of the day do almost nothing to reduce climate change. There is little that is neutral in B.C.'s carbon tax. It's simply bad public policy green-washed by the provincial Liberal government which is taking bows to applauding environmentalists at the expense of its province's future prosperity.
- Maureen Bader is the B.C. director of the Canadian Taxpayers Federation.
