In 2008 British Columbia (B.C.) became the first jurisdiction in North America to adopt an economy-wide carbon tax. Stewart Elgie, a professor at University of Ottawa, describes the results of that tax as “remarkable”, because the move towards low carbon economy was achieved without harming province's economy. The carbon tax is revenue neutral, meaning every dollar generated by the tax is returned to tax payers through reductions in other taxes.
The carbon tax applies to virtually all emissions from burning fuels, which accounts for an estimated 70 per cent of total emissions in B.C.
Province started with a relatively low price,
$10 a ton of CO2e, and then tax rose gradually to the current $30 per ton,
which works out to about 7 cents per liter of gas. At $30 per ton, British
Columbia’s government takes in more than a billion dollars in carbon taxes
every year, and this tax revenues support more than a billion dollars a year in
tax cuts, ranging from reductions to the general corporate and personal tax
rates to niche tax credits for children’s arts and fitness programs. Polling
shows that a majority of British Columbians (54 percent) supported the tax
when it was introduced, and a majority (58 percent) continue to support it
today.
In the first
five years after the carbon tax shift, fuel use in B.C. has dropped by 16 per
cent; while in the rest of Canada it’s risen by 3 per cent. So, province's fuel
efficiency improved by 19 percent compared to the Canada as whole. Moreover, while
tax critics had predicted that the tax shift would hurt the province’s economy,
in fact, BC’s
GDP has outperformed the rest of Canada’s since 2008.
When B.C. brought in
that tax, the expectation was that most of North America would also be bringing
in carbon pricing, but unfortunately it hasn’t happened yet. That is why B.C. has
decided to pause the further escalation of its carbon price to see if other
jurisdictions would begin to follow the same way. Recently B.C. Premier Christy
Clark has announced
the creation of a Climate Leadership Team tasked with updating the province's
efforts to combat climate change.
