Common ground on carbon tax resolution

At this year’s Union of British Columbia Municipalities convention, B.C. mayors and councillors narrowly defeated a resolution from New Westminster to restart annual carbon tax increases and invest the revenue in local climate solutions. Based on analysis of the resolution that we commissioned, the proposed steps would be good news for the province: the economy would grow and carbon pollution would drop. I had hoped the resolution would pass — and I thought it was going to, right until the final vote was revealed: 48 per cent for, 52 per cent against.

That may seem like a polarized vote, but it masks more potential for agreement than you might expect. I had three takeaways from the convention: 1) the carbon tax and the goal of moving away from fossil fuels are broadly supported; 2) simple solutions exist for many of the concerns raised about the resolution; and 3) there may be room for compromise on the all-important revenue question.

Broad and diverse support

Representatives from across the province spoke in favour of the resolution, including Director Sonia Furstenau of the Cowichan Valley Regional District:

“…we need to see a steady and constant increase in the cost per tonne if we want to see the impact the carbon tax can have, which is to move us rapidly to a green and sustainable economy.”

And Councillor David Dubois of Cache Creek:

“If you use it, you pay for it; if we are going to use carbon fuels, we pay for it. And this is the mechanism that allows government to transfer revenue back to local governments to implement projects that will encourage us to move away from these types of fuels in times when we’re struggling for other types of infrastructure dollars.“

Even among mayors and councillors speaking in opposition to the resolution, there was a common refrain of support for the carbon tax and reducing the province’s carbon pollution.

Simple solutions

Looking at the reasons why some mayors and councillors weren’t supportive of the resolution, most can be addressed with approaches used in the first phase of the carbon tax.

Councillor Lynda Hundleby from Esquimalt expressed the concern that an increasing carbon tax would raise costs for local governments. While fossil fuel costs would rise, this doesn’t need to represent a negative impact on local government budgets. Upgrading public buildings to be more energy efficient and switching to more efficient vehicle fleets help to reduce carbon tax costs, and many local governments are already investing in these types of solutions. In addition, the province’s Carbon Action Revenue Incentive Program compensates local governments for their carbon tax costs. The program could easily be scaled up to match any increases in the carbon tax rate, and it would cost less than one per cent of total carbon tax revenue.

A second concern, expressed by Councillor Barry Cunningham from Prince Rupert, was that the carbon tax imposes high costs on northern communities. Based on recent analysis, the tax cuts and credits financed by the first phase of the carbon tax are more than enough to compensate rural households for what they pay in carbon tax.

It would be helpful to ground truth these findings with northern and rural communities, and to test approaches that would help them reduce their fossil fuel use. Should the province decide to continue the current approach, a small portion of carbon tax revenue would be sufficient. For example, the northern/rural tax credit costs about $70 million per year — equivalent to six per cent of carbon tax revenue.   

Room for compromise

One point of opposition that doesn’t have an easy fix came from Randy Hawes, the mayor of the District of Mission and a former B.C. Liberal MLA. As with other speakers, he voiced support for the carbon tax. However, he wanted the carbon tax to remain revenue neutral. The resolution’s proposal to invest new carbon tax revenues in climate solutions clearly moves away from revenue neutrality.

That raises the question of whether there’s a compromise that would appeal to both sides: those who want to see increased public investment in climate solutions, as well as those who favour revenue neutrality. Most people I talk with aren’t adamantly in either camp — they like the idea of keeping taxes affordable, and they also like the idea of investing in climate solutions.

From my perspective, there isn’t a single right approach to this issue, and a compromise that can secure broad support should be possible. Hopefully that compromise can find its way to the surface through the province’s budget consultation and the ongoing development of the Climate Leadership Plan, so B.C. can start reaping the benefits of a strengthened carbon tax.