bc flagBritish Columbia’s recent carbon tax made waves in the US. (Sightline’s written about it here, here, and here.) But it’s not terribly popular in BC, as economist Marc Lee of the Canadian Centre for Policy Alternatives explains:

While there are plenty of good reasons why the Liberals should get beaten up at the polls, one of the key reasons for the change is the carbon tax, due to an aggressive (if questionable) campaign by the NDP and poor communications by the government.

In some public opinion work I’ve seen, two messages about BC’s carbon tax come out loud and clear. The first is that revenue neutrality is a bust—people may be willing to live with a new tax on carbon but think that giving the money back is a dumb idea; they would rather have revenues spent on public transit or anything else that would reinforce climate action. Second, they want tough action on industry.

Quick aside for American readers who may not follow Canadian politics: the Liberals are the right-of-center party that is currently in power in BC; they’re the ones responsible for the provincial carbon tax. The NDP—the New Democratic Party — is the left-of-center opposition party, which has criticized the carbon tax. And yes, you heard that correctly: the right is proposing a carbon tax and the left is attacking it.

Confusingly, although the BC Liberals and the federal Canadian Liberals are different parties with different orientations and platforms, their fates may be wedded in the next election—because the national party has also proposed a carbon tax. At the federal level, however, the Canadian Liberals are the opposition party; the national government is controlled by the Conservative Party.

Got that? Okay, so here’s what Canada’s carbon taxes may mean for the rest of North America…

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  • According to Marc, in addition to the political difficulty of levying a carbon tax, there’s a public perception problem with revenue-neutral tax-shifting, at least in BC. This is concerning to folks like me who think that revenue-neutral tax-shifting is an excellent idea on substantive policy grounds. For instance, Sightline tends to favor cap and rebate and cap and dividend approaches to climate policy—policies that put a price a carbon but return a significant portion of the revenue to taxpayers.

    But whatever the policy merits, the political will appears fragile. As Marc notes:

    If both the federal and BC Liberals lose elections on the basis of the carbon tax, it would take carbon taxes off the table for all of North America, potentially forever.

    I think Marc’s right that it will be extremely informative to watch how Canadian (and British Columbian) politics play out over the next few months. Still, I’m not quite as bearish. In fact, I think revenue-neutral carbon taxes are actually gathering steam in the US. To my mind, carbon taxes are second-best to auctioned cap and trade, but they’re still a very valuable tool.

    In the meantime, policy wonks should keep an eye on the Progressive Economics Forum blog. We don’t always see eye to eye on some climate policy issues, but it’s home to reliably good thinking.