Tall tales about BC’s carbon tax

The front page banner headline from the Vancouver Sun:

B.C. prefers NDP’s Carbon tax plan: Tax industrial polluters, not consumers, 82% tell pollster

It is painful to keep reading because the poll in question is based on inaccurate information about how the carbon tax actually works. Industrial polluters are subject to the tax to the extent that they burn fossil fuels. This covers 70% of BC’s emissions. Not currently covered are cement and aluminum production where industrial processes, not fossil fuels, are the source of emissions, and “fugitive emissions” from landfills and pipelines. These are being addressed, but that 30% of BC’s emissions is being used to spin a different story to British Columbians that is misleading at best.

No matter how emissions are tackled – through regulation, a cap-and-trade system, a carbon tax, or some mix of all of these – there will be higher consumer prices because business will pass along those costs. The only question is whether you want to address this regressive outcome, and what revenue source you might use to do that. Both carbon taxes and auctioned permits under a cap-and-trade system provide a revenue source that can be used to offset (or more than offset) the impact of higher prices at the household level while ensuring (rightly) that prices on the margin for emitting greenhouse gases are rising.

So I have to shake my head when I read:

Fully 82 per cent of those polled said they’d rather the government “target major industrial producers” instead of imposing a tax at the retail level.

The carbon tax is applied at the wholesale level. And to the extent that they burn fossil fuels in BC it is paid by industrial producers.

Another source of confusion is the focus on the tax and not on what happens to those revenues (the “tax grab” meme):

47 per cent of those surveyed said they were willing to pay higher taxes on fossil fuels if they also got an income tax cut, compared to 49 per cent who opposed the idea.

… But only a third (32 per cent) of those surveyed knew that low-income families will get $100 each year, and $30 per child, to help defray the burden of the new tax. The $100 “climate action dividend” that all British Columbians get is only for this year.

And less than one in five (19 per cent) knew the tax was “revenue neutral”, meaning that all money generated from it will be returned in tax cuts.

These are complicated issues and there is a lot of confused and contradictory thoughts out there based on people’s perceptions of climate change and how best to deal with it:

A clear majority of those surveyed (53 per cent) also agreed that “putting a price on greenhouse gas emissions” was a good idea, with 41 per cent opposed.

However, B.C. residents appear unconvinced that the B.C. government’s proposal is the best one. Only 18 per cent of those surveyed said the government’s carbon tax is the best way to curb climate change.

And even among just those B.C. residents who are convinced global warming is real, just 22 per cent think the carbon tax is the best solution.

12 comments

  • The educational aspect on climate change is in such a difficult space given the majority of elected governments and the industry resistance still seems to dominate many spaces.

    Until we get a lot more unison within the conductors of the choir, I am not sure how we are all supposed to act in harmony. The information is still so politically acidic, I am not surprised at the results of this poll. Actually I would have predicted these results.

    Just look at the haphazard info and resulting policy response to biofuels such as ethanol. Nobody seemed to do the hard research in determining how markets would react. As usual, this due to the fact that polcy people seem to believe in efficiency of unregulated markets, and imputation that haunts us all.

    Tell that to some of the worlds poor, how we are now going to use a good portion of land to grow fuels instead of food. And at the same time some awfully rich investors parking untold millions into a speculative resoucre bubble looking for some sign of safety and a prospect to grow their mountains of wealth. It is quite a disgusting display of market “efficiency”. I find that the carbon tax unless strongly regulated will fall into simialr market failure space.

    Fundamentally one cannot commodify the environment, it will only destroy it.

    Innovation, in a non-market based environment is the key to the future. How one maximizes the rate of innovation and the diffusion across many levels of the economic fabric is the the policy target that we ought to be focusing on. Again it will take a lot of resoucres and we must garner them from somewhere, given the declining employment in manufacturing and other sectors, I am thinking we just need the resources commitments and input from policy makers and a well fashioned plan. Even a direction in the short run would suffice as it would kick start a culture of renewal. Debt financing must start entering the lexicon once again, at least in our country. We as progressives have got to start beating the drum on this spending requirement for the environment.

    paul

  • If you want to reduce consumption you can ration quantities directly, or you can let increased prices do it for you. The advantage of capping emissions directly is that you can monitor the results. The disadvantage is that it requires administration. The disadvantage of waiting for the incremental increase in prices from the imposition of carbon tax, is that we do not know what price is required to reduce consumption i.e. price elasticities of demand remain supposition, therefore we do not know how long it will take for the tax to have an effect. Add in the fuel price increases that are taking place, and the carbon tax effect looks different than without price increases. This point was well made by Ken S on the babble thread citing Marc entitled cutely: Why the NDP climate change policy is dumber than two bags of hammers. http://www.rabble.ca/babble/ultimatebb.cgi?ubb=get_topic&f=45&t=000515

  • The idea that one can cut GHG emissions by going after big polluters and not having people feel the financial effects is the message both the BC NDP and the federal NDP seem to be leaving people with. Clearly the people of Ontario are going to notice when Ontario Power Corp (one of Canada’s largest polluters) gets hit with new costs, so this message doesn’t make sense.

    I agree with Duncan that the problem with the carbon tax is the uncertainty in emission reductions. Cap and trade defines this much better, but then, of course, the cost is uncertain. Perhaps this is an even bigger problem for two reasons. First, if you set the caps too high it can wreak havoc on the economy. Second, since you don’t know the costs, it is a matter of guessing as to what extra financial support you need to give to low-income Canadians in order to help buffer then from the costs. The tougher you are on emissions, the more help they need, but the amount won’t be determined until after the costs rise.

    Ideally, you’d like to know both costs and emission reductions, but that isn’t possible. I’d be interested in hearing arguments as to why it is better to have the uncertainty on costs, working under the assumption that one needs to be concerned with both the environment and poverty/low-income. I haven’t see arguments specifically addressing this by people pushing for cap and trade.

    Perhaps the best one can do is start slowly, whether it is a carbon tax or cap and trade or both, and make the tax system (including credits and income assistance) more progressive at the start and adjust as needed as the tax and/or caps become more ambitious. The BC plan does some of this, but doesn’t seem to go as far as the Green Shift in protecting low-income residents.

  • If the issue is climate change, and the instruments are taxes or cap and trade, why is it necessarily the case that the BC Gov’ts policies represent the last best word on the subject, and that any criticism of those policies is the result of either ignorance or dishonesty?

    Is it possible that those NGOs arguing vociferously and vehemently for full-throated, unqualified support for Premier Gordon M. Campbell’s approach have in mind the impact of these policies on certain commercial interests that provide the income base of some key donors? Are some of the NGOs convinced that the BC Liberals are going to win the next provincial election because of a strong economy and the Olympics euphoria and are determined to get on the bandwagon while the getting is good?

  • If the problems are carbon emmissions and climate change, and the available policy instruments are carbon taxes and cap and trade schemes, why is it that the policy mix provided by the Govt of Premier Gordon M. Campbell represents the last, best word on the subject? How is it that any criticism of those policies is properly seen, according to some NGOs and on-side academics, as either ignorance or dishonesty?

    Could it be that those NGOs and academics who are arguing the most vociferously and the most vehemently for Premier Campbell’s scheme are worried that a different government would pursue an approach that bit more deeply into their wallets and those of their major donors? Could it be that these NGOs are worried about the impact of alternative policies on the commercial interests (“green” power suppliers, such as solar and wind equipment) of some of their major donors?

    How is the general public supposed to know who is really being dishonest? Is it the critics, or the critics of the critics, who labour so very unselfishly on one of the government’s advisory councils in exchange for suitable per diems?

  • Rod, I wouldn’t believe anyone who said that Campbell’s policy represents the last, best word on the subject. You can see that all the environmental groups, while applauding the important step Campbell took in carbon pricing, are pushing for additional steps.

    How is the general public supposed to know who is being dishonest? Good question. I think nonprofit environmental groups are doing a bit to refute some of the inaccuracies — for example, the Suzuki Fdn has put out a myth and truth article on the BC tax — and I am sure there will be much more of this during an election.

  • Catherine, I will have to take a look at that item from the Suzuki Foundation, whose efforts seem to vary in quality.

  • Rod, please be advised that environmental NGOs generally don’t get money from commercial interests. Most of their funding is from charitable granting foundations that have endowments and from individuals who give $10-50 per year.

    There are some NGOs, of course, that do receive money from commercial interests. The Fraser Institute and the National Citizens Coalition come to mind.

    I suggest the reason that many environmental NGOs have supported the BC carbon tax is that it is the first serious attempt at carbon pricing in Canada, and they’d like to see it survive and lead to more such policies. Of course, most (or all) of them do argue that the BC carbon tax does not go far enough.

  • With respect, Dave, I simply don’t accept what you’re putting forward at all, and am somewhat insulted that you would think that a purely perfunctory and completely unsubstantiated denial represents a meaningful counterpoint. Without a actual accounting of the funding sources of NGOs no one can know what income groups or which business interests are supporting them, and simply asserting without proff that they don’t get their cash from business doesn’t even begin to cut it with me.

    Even if the cash is not coming from businesses directly, who are the individuals who are making donations in the thousand dollar and up range, which according to their annual reports is the mainstay of their funding? I think one could take a pretty safe guess that these are not minimum wage employees, but who are they? Could they be executive and professional level employees or shareholders in “green” companies?

    Tommy Douglas used to say of political parties, that he who pays the piper calls the tune. Why should it, and indeed how could it be different with NGOs, of whatever variety?

    I know there is one very well financed environmental NGO here in Vancouver that raises $6 million per year, … and then spends one sixth of that on more fundraising. There’s another one that pays it’s door-to-door canvassers on a commission basis.

    The notion that environmental NGOs operate in some rarified realm, where material interests are put aside in favour of a purely harmonious relationship with Mother Earth, and that the money that flows in all comes from wealthy heiresses who’ve taken up birdwatching rather than jet setting or yatching as their principal avocation, is just a bit too ridiculous for words.

  • Catherine wrote:

    I’m glad you don’t. Because some of your scribes indicate you do. In fact, what you wrote here is a wholesale understatement.

    The Liberals fraudulent environmental policies, including this bogus public-fleecing so-called “carbon tax,” aren’t insufficient. Rather, they are a wholesale detraction from any serious effort to build a more sustainable, democratic and ecologically compatible economy.

    This is from the other thread I wrote in response to Mark Lee’s articles. “Tall tales” indeed, Mark. Look how long yours is getting:

    To cut to the chase in point form:

    –“carbon tax,” to have any meaning what so ever, has to be based on the full cost accounting of carbon emissions where they originate: at source, where the total percentage of carbon within base elements that is released into the atmosphere can be assessed. That’s what makes carbon taxes successful in Europe, brought in by social democratic governments, and what the NDP is advocating here.

    –The Liberals’ tax is nothing more than an added fuel tax imposed on working class people (the vast majority of motorists) as basically a cost-recovery measure for the over $700 million they threw away on hand-outs to the major oil companies–some of the worst polluters in BC. Campbell himself has been forced to admit his bogus tax will only apply to about 25 per cent of carbon emissions in BC. That’s not a carbon tax.

    –Carbon taxes can only be successful if they are accompanied by infrastructure investments in new clean fuel technology, public transit and other direct measures to move the economy more away from fossil fuel dependency. Again, this is what the NDP is calling for.

    –The Liberals’ tax isn’t even a progressive fuel tax, since none of the revenues–ZIPPO–go into investing in GHG-reducing infrastructure technology. Instead, they go to, as said, off-set huge corporate tax giveaways and a pathetic $100 rebate to working people, which gives them practically nothing to invest in clean technology.

    –Contrary to what backward-thinking “environmentalists” (i.e. david Suzuki, so-called “Green” Party, etc) say, raising fuel prices on an already over-spent, under-paid, overly indebted car-dependent population without developing transportation alternatives for them to access is a rip-off. Period. The NDP is correct in pointing this out.

    –That’s why it is calling for universal carbon tax to be implemented incrementally and matched with development of alternatives so people can still get around while driving less or least not having to rely on fossil fuel motors.

    –Finally, while the Liberals fraudulently claim they care about the environment, they are pushing for further open-net fish farming, thermal fossil power generation, surface-stripping coal bed methane extraction and lifting the off-shore oil drilling moratorium, as well as river-stripping over-priced private power initiative and sticking people with the huge power rate increases.

    –the NDP is calling to lift the block on BC Hydro to invest in large-scale clean power production (wind, solar, tidal, etc.), developing non-fossil-fuel motor technology, community economic development, diversification via labour and cooperative investment and business models, etc.

    In short, this bogus “carbon tax” is supported by three main groups of people:

    1) Those who don’t know what carbon taxes and related climate change initiatives are

    2) Those with a vested interest in prostituting the fraudulent destructive Liberal regime and its pathetic policies

    3) Those who are merely wear a superficial “environmentalist” label and are comforted by symbolic meaningless gestures and rhetoric on the environment rather than serious economic reform to address these concerns.

    I have been strong advocate of carbon taxes, infrastructure investment and fundamental economic restructuring toward a more democratic, sustainable and truly prosperous economy more in harmony with nature.

    To see this regime push this fraud in everyone’s face and, worse yet, to see people and groups I once considered allies supporting it is truly saddening.

  • Marco,

    Thanks for your comments and critique, but looks like you are just repeating the NDP talking points, which as I have pointed out are misleading or just plain wrong in many dimensions. I would suggest looking at the NDP’s actual policies, which to the extent the exist (vaguely, that is), are but shades of grey compared to what the Liberals are proposing, and in blatant contradiction to their “axe-the-tax” campaign. There is also a lot more to it than just the carbon tax.

    No environmentalist I know thinks that the Liberals’ measures are sufficient. In fact, there is a LOT more to be done, but the government has made a very good first step that makes BC the leader on climate change in North America, like them or not. If the NDP had not been such opportunists on the carbon tax, the enviros would have already moved on towards pressing for those next steps, but many felt strongly that the carbon tax should be defended.

    According to environment critic Shane Simpson, the carbon tax is not high enough. OK, I agree, but it is a start, and once in place could be raised by future governments. Let’s see some consistency, please. The CCPA has endorsed a carbon tax in our Alternative Federal Budget for ten years — so we are just calling ’em as we see them. Marco, would you also advocate eliminating all existing fuel taxes for the reasons you oppose the carbon tax?

    I would love to back an NDP that was pushing for a more aggressive and detailed strategy but they have not delivered that. We’ll have to wait until before the next election I am told. Their sitting on the fence on Gateway and almost every climate change action, including a major transportation plan that got left on the shelves because they did not have the courage to offend anyone south of the Fraser.

    Besides, Marco, you are turning a policy discussion into a partisan political one. On that note, there are NDP members extremely dissatisfied with what their party is doing. And I have heard of NDP MLAs grumbling, too. So if you are suggesting that the NDP is unified and has a coherent plan, that is just wrong.

    But by all means, let’s press for a race to the top, and with a May 2009 election, let’s see which party can build on the existing green plan and take the next step.

  • “Their sitting on the fence on Gateway and almost every climate change action, including a major transportation plan that got left on the shelves because they did not have the courage to offend anyone south of the Fraser.”

    Marc, I don’t accept the analysis that Gateway runs counter to climate change goals. If you have anything you’d like to refer me to on this point, please do.

    I think Minister Falcon is quite right, for once, in saying that reducing congestion will reduce air pollution generally, including GHGs. As for the much abused “induced demand” analysis, this kind of thing might have some currency if there were not such major congestion on that route already. Much of the “induced demand” is already there as a practical matter. Travel time savings aren’t going to induce additional traffic in a system where alternative routes over the Fraser don’t really exist.

    Since you’ve pointed out that this debate is hard to get into without taking some kind of sides between the two BC parties, perhaps you could take us all into your confidence and explain the political thinking here. Why did a group of ENGOs, and the CCPA, all decide to line up in what amounted to a kind of chorus line in support of the BC carbon tax? Is there some political thinking going on here that you would like to share with us? Absent that, I really think it’s kind of lame to accuse others of “playing politics” when you won’t discuss or dislose the real nature of your own political calculations on this topic.

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