The BC NDP’s Axe-The-Tax Campaign
The BC NDP’s environment critic, Shane Simpson, wrote me to tell me why he disagrees with the BC carbon tax. With his permission, I quote:
The more I learn the more clear it becomes what a regressive and inept tax it is and why it needs to be opposed as vigorously as possible.
It hurts public services – burnaby schools today told us $1.2 million for them. Delta schools figure they will be cutting back on field trips to offset the cost. Surrey council is crunching the numbers figuring more than $2 million and the numbers grow. NGOs at our meetings are cringing. No commitment past year two to the low income to cover the impact. And for what?
Little or no impact on climate change. As Marjorie [Cohen] pointed out in her January oped taxes such as this have moderate success at very best and I challenge anyone to point out more definitive successes with a gas tax, particularly at these levels. If we want to let the market be the arbiter of climate change then it has happened in the last couple of months with skyrocketing gas prices. About a $135 tonne equivalency in terms of a carbon tax.
I believe if we want to fight climate change it will occur through a regulatory regime which includes a hard cap on emissions. It will require pricing that will ultimately be passed on to consumers – absolutely – but hopefully it will actually reduce emissions. It will require real investments in transit and support for local governments who will ultimately lead on this issue. It will occur because British Columbians actually are engaged in this discussion and embrace a plan they are part of developing.
Other than in symbolic terms this tax offers little or nothing to effect change and does hurt people and organizations that can little afford it and don’t deserve the grief. Especially when it is all to support a crass political greenwashing by Gordon Campbell while he merrily heads down a policy path that is the antithesis of sustainability on so many fronts. We can all do better.
Shane is correct on a number of points. We do need other measures in addition to carbon pricing to get real emissions reductions, and transportation investments are are top of the list. We do need a more democratic process that engages citizens in the need for change. And the carbon tax is small enough to be called symbolic, even by year five when it hits $30 per tonne.
But you cannot have it both ways. The tax cannot be the horror it is made out to be and also be symbolic. The NDP seems to be conflating arguments that play well as soundbites in focus groups but together do not make sense. As Stephen Gordon remarked (talking about the federal NDP), “The NDP is trying to suck and blow on this issue, but all it’s doing is making unpleasantly incoherent noises.”
Even if the carbon tax is symbolic, the symbol is important for our times. It means other governments are more likely to implement a carbon tax or other pricing measures, with the taboo broken. I would agree that the tax is too small, but once it is in place it is relatively easy for subsequent goverments to raise it (or it could be used to keep a floor on prices at the pump should market prices drop).
The design of the tax is also worth highlighting. It would be easy to have a tax that made income distribution worse, but about one-third of the carbon tax is recycled into a low-income credit that makes the system overall progressive, i.e. on average, poor families get more in credits than they pay in the tax (the amounts are small, about $39 in Toby Sanger and my calculations, but still …). There are some legitimate concerns about what happens in future years â€“ we will have to wait for subsequent budgets to sort that out, and if the credit does not increase in line with the tax, the government should be hammered for it.
As for examples, how about Europe? Gas taxes are much higher there, and consumption is less. And they end the day with much more egalitarian outcomes than in Canada. Yes, public transit investments have played a role, too, but surely higher prices are part of the reason.
Shane makes a good point about impacts on schools and local governments, although we are talking relatively small amounts. I don’t want to sound callous about a $1.2 million hit for the Burnaby school board. But I also just checked, and their total operating budget is almost $200 million, so the hit is about 0.6%. It would be interesting to see how Burnaby could find ways of reducing their fossil fuel consumption to avoid the tax.
Part of my frustration with the NDP’s “axe the tax” campaign is that they actually endorse carbon pricing. In fact, their campaign materials state:
Carole James and the New Democrat Opposition support emission pricing and believe the best approach is an integrated one that includes a carbon tax at source, focuses on big polluters, and ensures record oil and gas profits are used to support reductions in emissions. To be truly
fair and effective, we must crack down on big polluters now, not at some unspecified time in the future.
… All pricing models include a cost to consumers. But while industry must pay its fair share at source, consumers should not have to pay both at the pump and in increased prices passed on by industry. Low income households must also be protected from the economic impact. And the way emissions are priced must not erode local and public services.
I look at this and fail to see much difference between the Liberals and NDP. It is just that the NDP have seized on an anti-tax message because they think it will be good for them with an election next May. They may be right, or not â€“ so far the polls have not budged. People may not like the idea of a new tax but they may be willing to live with it as part of dealing with climate change.
Finally, the NDP is misleading people when they make statements that suggest that large emitters are not subject to the tax. All fossil fuels consumed in the province are subject to the tax, whether burned by business or households. To the extent that there are gaps in coverage it is to do with process emissions from cement and aluminum, and fugitive emissions from landfills and pipelines; they are working on coverage in these areas but could not address them in the BC budget due to budget secrecy.
While business will likely pass along the additional costs to consumers, this is true of cap-and-trade and regulatory approaches, too. The nice thing about a carbon tax is that there is a revenue stream that can be used to offset regressive impacts and make investments that accelerate the change we are seeking. It is a political decision to go for revenue neutrality, one that is rooted in our anti-tax times.
As for the hard cap on emissions, this is what setting targets is all about. A cap-and-trade system â€“ with all of its complexity around allocations, offsets, safety valves, credits, and gaming by big players and speculators â€“ may experience market failure at the end of the day and not meet its targets. It may sound like more certainty than a carbon tax, but I think this is largely illusory. That said, if it can be made to work, I’m all for a hybrid system â€“ which is where the BC government is going.