Thursday, February 21, 2008

Carbon Tax Hits BC

BC Green party holds no seats in the provincial legislature. But the governing Liberals are pushing forward their agenda for them, introducing "carbon tax" in their recent budget. The new tax will increase the price of gasoline by 7.2 cents a litre by 2012. Vancouver Sun begins its article by suggesting that "driving and other fuel-dependent activities are about to get more expensive". What the article doesn't mention is that every activity is in fact fuel-dependent.
This hurts everyone. Absolutely everyone. Yes, even transit riders. They’ll increase transit fares for the increased cost of gas. Yes, even bicycle riders. The price of commodities (safety gear, the bikes themselves) will increase because of shipping costs rising.
Let's not forget about heating fuel in the winter and about air conditioning in the summer (electricity too is mostly a fuel-dependent energy). Thus, those working from home or walking to their workplaces won't be spared either.

The government suggests the new tax hike will be compensated through a package of tax cuts and credits. But the proposed annual "climate action credit" for low-income families ($100 per adults and $30 per child) as well as one-time mail-out of $100 checks for every BC resident fall short of $1.85B the new tax will bring over 3 years.

Vancouver Sun article mentions $1B over four years committed to fight "climate change", but I noticed no broad-based income tax or sales tax reductions. In fact, the government plans to reduce taxes amount to only $481M over 3 years. The government also plans to spend extra $787M over four years on social services, but that's a spending increase, not a tax credit.

Most of those who commented on the article are upset about the new "green" tax hike:
This will hurt the economy. I will travel less. Shop less. China puts 1000 new vehicles a day on the road. B.C. is a fly on the elephant, and we pay through the nose for gasoline. Is Campbell the new Al Gore? I didn't know the B.C. Liberals were so LEFT WING!!!!!!
(Paul Levassiere Tue, Feb 19, 08 at 06:32 PM)
To make things worse, the only other major parties in BC are the NDP and the Greens...


aeroboy said...

It's not true that everyone will suffer, because the carbon tax is designed to be revenue neutral. therefore, the transit rider and the cyclist will perhaps pay a bit more because of the tax but that will be more than offset by decreases in the income taxes that they pay.

It's called tax shifting: pay tax on bad things (like pollution) anad don't pay tax on good things (like income). Currently we have no choice in the matter of how much income tax we pay, but imagine being able to structure your habits as a consumer so that you pay much less tax than before. Very few people actually need cars on a daily basis . It's selfish consumption with no regard for future generations.

Leonard said...

So far it doesn't look revenue neutral. At least - there's no equivalent reduction in personal and corporate income taxes or in sales taxes. Instead we get more spending - either direct or disguised as "green investment". So in the end, this turns out to be a tax hike, not a tax shift.