How a carbon tax shift worked in British Columbia

OECD Secretary-General, Mr. Angel Gurría described the implementation of British Columbia’s carbon tax “as near as we have to a textbook case, with wide coverage across sectors and a steady increase in the rate”.

British Columbia’s centre-right political party, the Liberal Party, implemented a broad-based low rate carbon charge in 2008 of C$10 per tonne of CO2e emissions. (The proposal took only four months to implement in law.) The rate has increased annually by C$5 per tonne until reaching its final rate of C$30 per tonne in 2012.

The tax is revenue neutral, meaning every dollar collected is returned to British Columbians through reductions in other taxes and tax credits. This amounted to a C$1.2 billion redistribution in 2013/14.

British Columbia’s carbon tax shift was reviewed in 2013 to consider the impact the charge was having on the economic competitiveness of the state, especially on agriculture and food production. The charge was found to have had a small negative impact on GDP. The review, however confirmed the current policy settings would remain.

How effective has the charge been? British Columbia’s consumption of petroleum fuels has fallen by 16.4 percent compared to the rest of Canada’s since 2008. Per capita greenhouse gas emissions have fallen 5.3 percent faster than in the rest of Canada. Economically, British Columbia has slightly outperformed the rest of Canada.

Ongoing polling shows the charge has remained popular. No major political party now opposes the tax shift.

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1 Comment Posted

  1. Mmm, from what I’ve read, the BC experiment was not as effective as it’s made out to be. Consumption of fossil fuels was already falling when the tax came it, with the trend line little changed thereafter. There have been other criticisms over its effectiveness but I don’t recall all of the details. I just hope the Greens aren’t looking through rose coloured glasses and examine all of the evidence.

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