The key ingredient to a successful climate plan is a stronger carbon tax Solutions for climate leadership — Part 5

Blog - Aug. 5, 2015 - By Matt Horne

Climate Action Dividend for low-income British Columbians. Thankfully, the negative impact that carbon taxes can have on low-income British Columbians can be addressed by increasing this tax credit to keep pace with any increase in the rate of the carbon tax. Photo: Flickr

 

Please increase B.C.’s carbon tax. 

If I had only five words to share about B.C.’s forthcoming Climate Leadership Plan, those would be the five. Given I have a few hundred, I’ll elaborate a little.

B.C.’s carbon tax was implemented in 2008 and has proven to be an economic, environmental and political success. B.C.’s economy has outperformed the rest of the country, per capital fossil fuel consumption has dropped and all parties with seats in the legislature support the policy.

Despite the good news, the carbon tax was frozen in 2013 until early 2018. The freeze means that every year the policy becomes a little less effective as inflation creeps up. This is one of the reasons why B.C.’s carbon pollution is projected to increase over the next five years. One of the key questions to be decided in the Climate Leadership Plan is whether the provincial government will thaw the carbon tax freeze.

For many people (myself included), the Climate Leadership Plan will need to include an increasing carbon tax to be considered a success. If you’re already in that camp, please let the government know through their survey by August 17 or email them directly by September 14.

While I think the province should start increasing the carbon tax again, I recognize there are challenges in making that decision. Here’s a quick rundown on the challenges I hear about most often and why I think they’re manageable.

Keeping the economy competitive

It’s in everyone’s interest to ensure that climate policy supports economic development and innovation. The last seven years have shown that B.C.’s carbon tax can achieve these objectives and the next phase should be aiming to do the same. Broad-based reductions in corporate income taxes and targeted investments in emissions-intensive industries like cement are current approaches that B.C. could use again. Investments or tax credits to support B.C. companies poised to take advantage of growing global demand for clean energy solutions is another option worth considering.

Maintaining support from British Columbians

Public polling has shown relatively consistent support for the carbon tax. The most recent poll puts support at 58 per cent, relative to 38 per cent who are opposed. To maintain that support going forward, it’s important to make sure the carbon tax continues to be part of a broader plan that helps make solutions available in all parts of the province. It’s a much easier policy to support if people also see government implementing policy, making investments and working with partners like local governments to increase the availability of options to reduce fossil fuel use.

Helping low-income households

A legitimate concern with carbon taxes (as with other consumption taxes) is that they can negatively impact low-income households because a higher portion of their income goes to basic needs like heating and transportation. Thankfully, this is a challenge that can be relatively easily addressed and an increasing carbon tax could actually be used to improve income equity issues. The easiest approach would be to increase the low-income tax credit to keep pace with any carbon tax increases.

Returning to my first five words, the time is right to increase B.C.’s carbon tax. The challenges are manageable and the rewards are significant. Increasing the carbon tax is B.C.’s best opportunity to make progress on its climate targets in a way that helps the economy and encourages innovation. And, as a nice bonus, B.C. could boost climate action momentum in Canada and globally by announcing that we’re ready to build upon our successful experiment.

So, let’s get on with it.


Matt Horne

Matt Horne was the Pembina Institute's associate regional director for British Columbia until 2016.


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