We’ve beenratheroutspoken in our support of BC’s carbon tax shift. It stands out among global carbon pricing policies as particularly well-designed, for at least two reasons. First, it’s comprehensive and consistent. Most other policies around the world that put a price on carbon emissions also contain exemptions or loopholes that miss large parts of the economy, or apply different kinds of rules to different fossil fuel users. But BC’s carbon tax shift applies evenly to all CO2 emissions from fossil fuels, so it creates consistent, uniform, and economically efficient pressure to reduce climate-warming emissions. Second, BC’s tax shift, at least as it was originally structured, contained built-in economic protections for lower-income families that stand to lose the most from higher energy prices. That’s key, since a poorly-designed carbon pricing policy has the potential to fall heaviest on poor folks—the people who’ve done the least over time to generate climate-warming emissions and who have most to lose from global climate disruption.
But Marc Lee of the Canadian Center For Policy Alternatives-BC, who’s also generally a supporter of the carbon tax shift, is increasingly wary of the policy’s impact on the province’s lower-income folks.
When it was introduced back in 2008, the carbon tax dedicated about one-third of revenues to a low-income credit . . . This was a big positive with households in the bottom 40% of the distribution slightly better off on average, with credits exceeding taxes paid.
Alas, last year’s increase to $15 a tonne wiped out that gain because the low income credit barely increase in value (from $100 per adult to $105), while the carbon tax grew by 50%.
The new 2010 increment to the carbon tax will make the whole regime regressive—meaning a bigger hit to low-income families relative to their income; they will be absolutely worse off even after considering the credits.
Drat. The lesson here, perhaps, is that good things can come to an end: it takes vigilance and political pressure to keep even the best-designed of policies from morphing into a form that’s not nearly so benign.
Flag photo courtesy of Flickr user Alanna@Vanisle, distributed under a Creative Commons license.
Is there any sign that the BC government will try to correct this problem? It would be most helpful to have an income based example of how this started, and how it will shift now with the change in the cost per ton going up.
Is there evidence that the BC carbon tax is really a problem for the poor, or is this just speculating by CCPA-BC? The role of the CCPA-BC appears to be to criticize whatever the government of BC does, kind of like an opposition party. If the public policy benefits of the BC carbon tax equal or outweigh the issue of regressivity, then there is little reason to change the tax. Like most demand side management conservation tools, any consumption taxes are inherently inequitable, but the issue is really how severely inequitable? Face it, the rich will always be with us and they won’t need to respond to any consumption taxes. Thank heavens that there aren’t so many of the rich around!Whether it is taxing water, energy, or GHG emissions, a consumption tax is inequitable. What sound public policy can do is to confirm if the poor can respond to these environmental consumption taxes and to make changes in their consumption patterns and then to effectively reduce the tax impact. If the lower socio-economic levels can’t respond, public policy should address that – not just relieve them from the tax altogether.
So, the *gain* is “wiped out”? You imply that the poor are still at least breaking even. This is by design. How can the payback to a group move from being a boon to being a burden, unless there is another group which has dramatically increased efficiency and decreased fossil technology? This is by design, also.If the poorest and slowest to change among us are burdened as the rest of us change technology, then the government should find ways to help the poor change, not scrap the law. You haven’t made your case.