Tuesday, February 19, 2008

B.C Leads The Way

Ohhhh, scary, a carbon tax woven within a revenue neutral framework:
As part of the new tax plan, carbon-based fuels — including gasoline, diesel, natural gas and home heating fuel — will be taxed at $10/tonne of greenhouse gases generated, starting July 1, 2008.

That will translate into a new 2.4 ¢/litre tax on gasoline at the pump and 2.8 ¢/litre for home heating fuel.

The carbon tax rate will rise by $5 a year for the next four years, until it hits $30/tonne of greenhouse gas generated in 2012, said Taylor.

The tax will earn the government an estimated $1.85 billion, but Taylor said the plan will be revenue neutral. The government will give all of the money back to taxpayers in the form of tax breaks, she said.

Income tax rates for the first $70,000 earned will be cut by five per cent in 2009, giving B.C. the lowest personal income tax rate in Canada for those earning under $111,000.

The corporations' tax rate will also be cut one per cent to 11 per cent in 2009, and 10 per cent in three years, making B.C.'s corporate tax rates on par with the lowest in Canada.

In total, businesses in B.C. will pay a total tax rate of 25 per cent when federal and provincial taxes are combined, making B.C.'s corporate tax rate 10 per cent lower than the U.S. average, said Taylor.

She also said that in the first year there will be $100 rebate to every adult and child in the province to offset the cost of the carbon tax.

The British Columbia plan provides an incentive for people to cut their own carbon footprint. Under this carrot and stick approach, if you can lower your own emissions, through efficiency or upgrades, you will not be burdened by the carbon tax- you can neutralize the fiscal impact. On the other side, traditional taxes are lowered, which means conservation could translate to a lower overall tax burden. Also, by reducing personal and corporate taxes, there is fiscal room to make improvements, more money available to "upgrade".

The gas guzzling, fuel wasting, leaving the heat up all day while at work, monster home dwelling, environmental parasite, pays through the nose, while the conscientious person who makes an effort sees a reward. Sounds like progress from here, and we now have a concrete provincial plan which nicely contrasts the Conservatives excuses.

14 comments:

Mushroom said...

Shhh.

Don't tell this to Baird the Pit Bull.

He will spin it by saying the Cons are providing the funds for BC's plan, unlike thirteen years of Grit _____________.

You fill in the blank. The clock is ticking on Baird's court, waiting for his response.

Steve V said...

I wonder if this will hurt the Cons in British Columbia during an election?

Mushroom said...

The Cons will probably be in a tough two way battle in most seats. Unfortunately, I don't see it helping us, as the initial beneficiary is the NDP. The Greens are the wildcard in this race. They can turn these two way races into a three way battle.

Layton's lend me your vote is effective in BC as it gave them a half dozen seats at the expense of us. I don't see the Grits taking them back. Vote splitting becomes more crucial there. A Greens in the five to eight percent range helps the incumbent, anything more means the whole electoral map goes kapooey.

Steve V said...

I'm curious to see what happens in Lunn's riding, if people actually coalesce around an alternative, as suggested.

MarkCh said...

Yes, this plan is quite sensible. Of course, it won't achieve Kyoto targets - you won't cut gas consumption 35% with a 7.2 cents a litre tax - but it will have some effect. I wonder why Dion hasn't proposed anything like this? His current plan is dirigiste and open to all kinds of shenanigans - this is simple and practical.

Miles Lunn said...

Maybe the opposition could point out that the BC Liberals despite their name are generally right of centre on most economic issues, so if they can support this, why can't Harper. And never mind Campbell's popularity since becoming more green has gone up, not down.

That being said, British Columbia has always been ahead of the curve on the environment, so I suspect it is only a matter of time before the rest follow.

What I have though never understood about BC despite living there most of my life is why despite being progressive on most issues, it continuously elects the most right wing party on the ballot in large numbers. On most issues British Columbians are generally to the left of Ontarioans, yet looking at their voting patterns, you would think the opposite were true.

Rick said...

While I applaud the revenue neutral stance here, what I don't understand is that if the goal is to lower the carbon footprint by taxing carbon emissions while lowering income taxes, what happens when you do reduce carbon use through tax?

If people change their behaviour and use less carbon, tax revenue goes down. I would assume that you would then raise the carbon tax to compensate, but at some point that will bring diminishing returns. That would mean that the gov't has to go with less ax overall, or go back and raise income tax.

Serious question, is my logic off, or has someone (Green Party?, Libs?) addressed this and done some studies?

It just seems to me that the carbon tax revenue neutral plan can't work in it's ideal sense.

If the future impact has been addressed, then I think this plan is fantastic and want to see it done country wide (forget intensity targets and carbon budgets - give us a carbon tax and lower other taxes.)

Note to Federal Tories and Liberals - a plan like this will WIN the next election. Cancel the carbon budget and intensity target crap that has been proposed to date.

Steve V said...

"That would mean that the gov't has to go with less ax overall, or go back and raise income tax."

Rick, if people become so efficient that revenues actually go down, you assume the tax burden is less. If that happened, and the government was forced to raise taxes, it would only bring you back to where you started, with the bonus of a clean environment. Your taxes might look like they went from where you were, but they wouldn't if you looked at where you started, if that makes sense.

" Of course, it won't achieve Kyoto targets - you won't cut gas consumption 35% with a 7.2 cents a litre tax - but it will have some effect."

Mark, you're arguing that in isolation. The gas tax alone can't achieve that, but when it works in concert with rebates for efficient cars, automakers responding to the market with higher efficency, government re-tooling its fleets, industry responding to costs, then the figure seems far more reasonable.

Tomm said...

Steve,

It is interesting. I applaud the effort by the BC government. But that being said, I will be curious to watch what effect it has.

John Baird will make an announcement that will include the words "thats what I'm talking about".

David Suzuki will make an announcement that will include the words "we should start constructing gulags"

Tomm

Rikia said...

Why aren't they investing the proceeds into alternative energy research?

"The major industrial country that gets the greenest the fastest, with the smartest technology, will be the leader of the 21st century"- Thomas Friedman, The World is flat

Koby said...

Introducing a regressive consumption to pay for an income tax cut is hardly progress in my mind. Now, if the Libs had of reduced the heath care tax instead of income taxes that would be better, but still hard from perfect.

MarkCh said...

Steve, all the effects you mention take much more time than Kyoto allows to kick in. That's why this won't get us to Kyoto - which includes strict time limits. In any event, I much prefer a cost-based approach like this one, where we decide what we are willing to pay and see how much reduction that gets, to a results-based approach with unknown costs. Over time, a cost-based approach is almost bound to be more effective, and can build agreement between the "greenhouse cuts are actually cheap to do" and the "greenhouse cuts are far too expensive" camps.

Rikia and Koby, the point of making the plan revenue neutral and cutting income taxes is to give the plan bipartisan support. While it may not be the ultimate greenhouse cutting plan, something that is agreed to by both right and left is likely to be more effective in the long run.

Simplicity is also a virtue. I don't really trust government to subsidize alternative energy research effectively, and I certainly don't trust them to subsidize deployment effectively. This plan leverages what governments can do well: tax.

Steve V said...

They are investing in alternative energy research.

Tania said...

The problem with this plan is it puts most of the responsibility on individuals and not on corporations.

Given the high cost of rent/mortgages/places to live in BC, yet another tax on people with low income puts them, again, on the edge.

I don't know, maybe I've been too busy working to pay attention but I haven't seen any signs of our economy slowing in BC save for the lumber industry. Yeah, that's taking a hit but the mining and oil exploration has gone up. And it'll be interesting to see the outcome of judicial reviews on a mining site in northern BC. Environmental assessments discouraged the plan while business is advocating. That'd be more telling than this budget on how "green" this province is.