Breaking: British Columbia not yet destroyed by carbon tax

A new report on the impact of taxing carbon

A new report from Sustainable Prosperity suggests that British Columbia’s carbon tax has not yet rendered the province a barren hellscape where those who’ve managed to maintain their sanity struggle daily to survive amid the constant threats of roaming tribes of cannibals and a unique species of superwolf that it turns out our carbon emissions were suppressing.

BC took a risk in introducing the carbon tax, which was initially quite controversial. It is one of the few North America states or provinces with a price on carbon — a price that is among the highest in the world. That risk seems to have been rewarded. BC households and businesses now pay the lowest income taxes in Canada, due to the tax shift, and use the least amount of fuel per capita of any Canadian province. BC is also decoupling its economic growth from fuel consumption (and GHG emissions) faster than the rest of Canada. In other words, it is building a low carbon economy – which should position it well for future success if global markets continue to evolve in that direction. It will also help to shelter the BC economy from future petroleum price increases and volatility. 

Finally, it is also worth briefly noting the carbon tax’s political impacts. The opposition NDP made the tax a major issue in the 2009 provincial election, but it did not hurt the governing Liberal party that introduced it, as they achieved a small gain in seats. The carbon tax now enjoys bipartisan support, and a 64 percent public approval rating (Environics 2012) – remarkable for a tax. Thus, the actual experience with carbon taxation in BC – its environmental, economic and political impacts – appears to be directly opposite to the perceived reality in the federal political debate on this issue.

British Columbia’s own review of the carbon tax is here, with a breakdown of the tax measures here. The province identifies a “a small negative impact on gross domestic product (GDP) in the province,” while Sustainable Prosperity notes that “BC’s economy has slightly outperformed the rest of the country over the period that the carbon tax has been in place.”

Christy Clark’s government is planning to push other jurisdictions in North America to follow the province’s lead.

Meanwhile, Massachusetts might soon have a referendum on taxing carbon, while Kevin Drum wonders if a price on carbon will be the result of Barack Obama’s rush for new regulations. Australia has dumped its carbon tax, but replaced it with cap-and-trade. And a former Calgary city councillor wonders if a carbon tax could be used to pay for the infrastructure and reconstruction necessary to deal with extreme weather.