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British Columbia’s Carbon Tax Shift: Design and Implementation Challenges

British Columbia’s Carbon Tax Shift: Design and Implementation Challenges. Tom Pedersen , University of Victoria and Stewart Elgie , University of Ottawa. Latin American Carbon Forum, Bogota, September, 2014. The BC Carbon Tax: Key Design Points. Accelerating :

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British Columbia’s Carbon Tax Shift: Design and Implementation Challenges

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  1. British Columbia’s Carbon Tax Shift: Design and Implementation Challenges Tom Pedersen, University of Victoria and Stewart Elgie, University of Ottawa Latin American Carbon Forum, Bogota, September, 2014

  2. The BC Carbon Tax: Key Design Points • Accelerating: • July 1, 2008: $10 per tonne of CO2 emitted rising $5/yr to $30/t in 2012 (now frozen) • this provision appears to have changed behaviour in BC • Revenue neutral (in fact, it’s revenue negative, since Year 1): • every penny goes to reductions in other taxes • now irrevocable, as income taxes would have to rise substantially if the tax was repealed • Fair: • tax reductions and supports focused on lower income strata • Simple: • the tax is applied at wholesale distribution points (six such points in BC). Thus, no additional bureaucrats needed.

  3. Carbon tax rate is based on carbon content of fuels. Rates as of July 1, 2008 and July 1, 2012, calculated on the basis (for 2012) of $30 (CAD) per tonne of CO2equivalent emitted.

  4. Implementation Issues, Positive and Negative • Revenue neutrality – tax shifting, not imposing: • no opportunity to claim “just another government tax grab”. • Competitive disadvantage: • remains an issue since most trading jurisdictions have not followed BC’s lead (unexpectedly, as of thinking in 2008). • Politics: • centre-right “BC Liberal Party” was re-elected in 2009. Captured environmental vote when the left-centre party campaigned with, “Ax the tax!”. Re-elected again in 2014. • Economic stimulation: • cleantech is one of the fastest growing economic sectors in BC (as of 2012). • Communication with broader society is a must: • tax shifting remains poorly understood in BC.

  5. Prof. Paul Ekins, Chair of the UK’s Green Fiscal Commission: “BC’s carbon tax is a template for the world.” www.pics.uvic.ca

  6. Per capita fossil fuel consumption, 2000-2013 July 1, 2008 July 1, 2012 Rest of Canada 19% Terajoules per capita British Columbia Data compiled by Stewart Elgie, University of Ottawa

  7. British Columbia’s Economic Performance: % Change in GDP (f = forecast) British Columbia Canada Change in GDP, % Statistics Canada data; graph compiled by Stewart Elgie, University of Ottawa

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