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  • A critical look at BC’s new tax breaks and subsidies for LNG May 7, 2019
    The BC government has offered much more to the LNG industry than the previous government. Read the report by senior economist Marc Lee.  
    Canadian Centre for Policy Alternatives
  • The 2019 living wage for Metro Vancouver April 30, 2019
    The 2019 living wage for Metro Vancouver is $19.50/hour. This is the amount needed for a family of four with each of two parents working full-time at this hourly rate to pay for necessities, support the healthy development of their children, escape severe financial stress and participate in the social, civic and cultural lives of […]
    Canadian Centre for Policy Alternatives
  • Time to regulate gas prices in BC and stop industry gouging April 29, 2019
    Drivers in Metro Vancouver are reeling from record high gas prices, and many commentators are blaming taxes. But it’s not taxes causing pain at the pump — it’s industry gouging. Our latest research shows that gas prices have gone up by 55 cents per litre since 2016 — and the vast majority of that increase […]
    Canadian Centre for Policy Alternatives
  • CCPA welcomes Randy Robinson as new Ontario Director March 27, 2019
    The Canadian Centre for Policy Alternatives is pleased to announce the appointment of Randy Robinson as the new Director of our Ontario Office.  Randy’s areas of expertise include public sector finance, the gendered rise of precarious work, neoliberalism, and labour rights. He has extensive experience in communications and research, and has been engaged in Ontario’s […]
    Canadian Centre for Policy Alternatives
  • 2019 Federal Budget Analysis February 27, 2019
    Watch this space for response and analysis of the federal budget from CCPA staff and our Alternative Federal Budget partners. More information will be added as it is available. Commentary and Analysis  Aim high, spend low: Federal budget 2019 by David MacDonald (CCPA) Budget 2019 fiddles while climate crisis looms by Hadrian Mertins-Kirkwood (CCPA) Budget hints at priorities for upcoming […]
    Canadian Centre for Policy Alternatives
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What’s next for BC’s carbon tax?

An oped of mine was published by the Vancouver Sun today:

What’s next for BC’s carbon tax?

Marc Lee

Climate change forced its way onto the political agenda in 2012, as Hurricane Sandy ripped through the northeast United Stages just days before the election. And while action remains frustratingly slow, extreme weather disasters in the billions of dollars are making a statement that politicians can no longer ignore. The costs of our addiction to fossil fuels are starting to pile up, and we cannot afford to keep dithering.

Recent surveys show that the public is ahead of the politicians in wanting climate action. Resistance to change, however, comes from greed and fear: vested interests from fossil fuel industries have disproportionate influence in the corridors of power; and politicians and citizens alike are concerned that action will hurt the economy.

Saying no to new fossil fuel infrastructure like the Enbridge pipeline is an essential first step towards a shift to a clean energy economy. But to pass the political test, climate action must also speak to a positive vision of a zero carbon BC. It must be fair, build alternatives like public transit and district energy, and create good jobs in areas that lower our greenhouse gas emissions.

Decarbonizing our economy will take time, and let’s face it, money. BC has an advantage here from its large base of clean electric power, its early actions on climate, and in particular, the carbon tax. While it is hard to differentiate between the impact of climate actions and the recession, the carbon tax deserves some of the credit for BC’s drop in GHG emissions, down 4.5% as of 2010 relative to 2007 levels.

A revamped and reformed carbon tax regime should be the engine for the “green industrial revolution” the province needs. Making the combustion of fossil fuels more expensive shifts incentives away from carbon-intensive activities, while providing revenues to build the green infrastructure we need. Most economists recommend a steadily rising carbon tax over time, and must eventually be quite high.

BC’s carbon tax was introduced in July 2008 at a level of $10 per tonne (2.3 cents per litre at the pump for those who don’t speak fluent carbon), and has gone up $5 per year to reach $30 a tonne as of July 2012.

Since then, the government has been silent on next steps for the carbon tax. Budget 2013 marks a key decision about whether the carbon tax will continue to be increased. And as the May election approaches, we also need to hear where the NDP is on this subject.

For a fair and effective carbon tax in BC, some reforms needed before we continue to increase the tax.

First of all, the tax should be expanded to cover all industrial emissions, including process emissions (much of which are in the oil and gas sector) that currently go untaxed. They should also apply the tax to BC’s exports of coal and natural gas (at least until importing jurisdictions have their own equivalent tax).

Second, to make the tax more fair the existing low-income carbon tax credit must be fixed, by increasing payments substantially and making them available to more households further up the income ladder. Additional credits to households in rural communities should be provided, since transportation alternatives are not readily available.

A redesigned carbon credit could be designed, for example, so that the bottom half of households would receive a credit that, on average, is larger than carbon tax paid (meaning, they would be net beneficiaries), while 80 percent of households would receive at least some amount. Under such an approach, the heavy lifting is accomplished by households with higher incomes – those who already have the largest carbon footprints.

Third, we need to use carbon tax revenues to support complementary climate actions like building retrofits and public transit, as Metro Vancouver mayors have urged. Using the revenues to build the infrastructure we need for the 21st century would also support tens of thousands of new green jobs – far more than BC would see from building new fossil fuel infrastructure in the form of pipelines and LNG facilities.

Continuing with $5 annual increases would lead to a carbon tax of $50 per tonne by 2016. Expanded to cover all industrial emissions, it would raise over $2 billion per year. Applying the tax to exports could raise several billion more because BC’s exported emissions from coal and natural gas are much larger than emissions within BC.

This is a win-win opportunity for BC. We can wean our economy and export profile off of polluting fossil fuels, create new jobs and be global climate leaders, fuelled by a progressive carbon tax system that reduces inequality as it raises the price of emitting greenhouse gases.

Marc Lee is senior economist with the CCPA-BC. Download his submission to the Carbon Tax Review here: http://www.policyalternatives.ca/publications/reports/ccpa-bc-submission-carbon-tax-review, or download the research report on which the submission is based: http://www.policyalternatives.ca/publications/reports/fair-and-effective-carbon-pricing.

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