The BC Liberal Government's Carbon Tax Needs Some Thoughtful/Green Criticism

I think it's important that Greens and Provincial Green Parties start a discussion on BC's "Green" budget because we have seen a pretty positive response to the BC Liberal Government's carbon tax and it would be nice to think that we have analyzed the budget and its implications for Green policy.

So, here is my take on the BC Government's Carbon Tax and the revenue neutral part of the Liberal plan. (Our Liberals are really a small "c" conservative (right)party despite the name. They are an amalgam of the Socreds, the former provincial Liberals and others.) Prior to the budget, because GPBC doesn't yet have our financial and taxation policy written, I have been using the GPC level of $50 per tonne as the starting point, so $10 is decidedly low. That said, I think there are two ways in which the proposed tax is bold. First, they called it a Carbon Tax and second, they made it revenue neutral and used the words "tax shifting." So, for those reasons it is bold and they have proven that imposing a carbon tax is not politically negative and that it can even increase popularity if the reaction by NGOs, media and business groups is any indication.

In terms of policy, however, I don't believe this is a well designed carbon tax and I don't like the way that tax shifting has been done. It seems to me that the purpose of this kind of financial instrument is to get the end result that you want - which in this case is a reduction of Greenhouse Gas (GHG) emissions. There is nothing in this tax that will achieve that result. I think the Liberals missed an opportunity to design an effective carbon tax and to use it to get results. I believe the Liberals were compromised by their ideology and by their financial connection to big business. So these are some of the problems I see with the tax as it is designed:

* it is really a surtax on fossil fuels - at the pump and for heating - so it is a tax at consumption
* therefore, it does not apply to production of fossil fuels and, in fact, the fossil fuel companies got some additional subsidies for oil & gas exploration in the budget.
* the tax will hurt people on low income for whom the problem is one of cash flow. They have to pay the extra charge up front and then the government will send means-tested adults $25 per quarter ($7.50 for each child). I worry that the increased up-front costs for people on low income could make their circumstances more dire and most have few choices in their use of fossil fuels.
* the tax will hurt small businesses and independent contractors who have fossil fuel costs they can't avoid. The reductions in income tax will not compensate for the increased costs of doing business. This applies to truckers too - while I don't want to move goods by truck our rail infrastructure and service sucks so there are no alternatives.
* there is no tax on electricity despite the fact that BC imports about 18% of our electricity from coal fired plants in Alberta
* there is no connection between the minor income tax savings and the fuel surcharge. Social marketing would suggest that to change behaviour people must see the connection and the change in behaviour must be easy, convenient and economically beneficial. This tax does not do this and Minister Taylor said several times in the speech that the choice was up to the individual as to whether they would change their behaviour. While I'm not into social engineering, I believe we must use our taxation and financial powers to get the result that we want. Just promoting a few suggestions for how we can lower our carbon output does not mean we will do it - in fact, social marketing research proves we won't.
* the day after the budget, fuel prices increased between 8 and 10 cents a litre and we still went out and drove and filled our vehicles. My predication is that a 2.7 cent surcharge on July 3rd will have no impact. I'm hoping the GPBC can prove this by recording the emissions level in July and comparing it to the level when the next budget comes down in February 2009. I predict we'll see a continued rise as if the tax did not exist.
* the government is going to send each of British Columbian $100 - sort of a Ralph bucks lite - prior to the implementation of the tax. This will do nothing except add a small blip to the CPI. If the government had instead used the $450 million as a lump, we could have done all kinds of things to move us in the direction we need to go. It could have been used to subsidize transit fares; to provide incentives for installing solar hot water; to help building owners (including homes) to retrofit their structures to move toward carbon neutrality; to help municipalities improve their infrastructure, etc. I think the government deliberately made this expenditure useless - partly vote buying but maybe to build in failure.

So I would like to see carbon taxes and tax shifting used to get the result we want. The Liberal government continues to support lots of things which are counter indicated in the fight against climate change.

* the perverse subsidies for fossil fuel, mining and forestry companies continue and are increased
* the government wants to lift the moratorium on off shore oil and gas
* the government is supporting a LNG plant on Texada Island and condones the increase in tanker traffic along our fragile coasts
* there are increased exploration rights for uranium, coal bed methane and other dirty fossil fuels
* our forestry industry which could be seen within a climate change strategy is subject to no reform
* the government continues to fund pavement solutions to congestion and to support the Pacific Gateway project. This project has many dangerous consequences - BC becomes a conduit to get cheap goods from China to Chicago one day earlier; we continue to load ships full of coal to be shipped to China 24/7 - high grade coal to be used in the steel production industry rather than dirty coal for electricity production - but coal none the less; part of the design is to expand pipelines from Alberta tar sands which makes BC part of the SPP energy corridor between Alberta & the US. TILMA (The Trade, Investment and Labour Motility Agreement with Alberta) feeds into this as it is a free trade agreement designed to reduce provincial barriers and to harmonize rules.
* the improvements to transit will not do much - even in the lower mainland where 90% of the money is being spent. There is no regional transportation planning in other regions, no investment in rail, no real intention to make transit the better option.
* P3s are still the order of the day and further privatize and reduce public oversight.

So, I think we need to be careful that we don't become cheerleaders for the Campbell Government initiative like the press (see Jeffrey Simpson) or like the environmental NGOs in BC. We may all want to see a government impose a carbon tax but I think it should be well designed and our job as Green Parties is to make sure such a tax is designed for a purpose and that it will allow us to achieve the goal and to measure progress. That being said, we will see other carbon taxes now that BC is imposing one so that may be good - again with the qualification that if the other taxes are equally poorly designed we won't achieve the needed result. We also need to balance the need to address climate change with the need to make sure our health care, education and social services are adequately funded and meet the needs of the citizens. The BC budget despite its rhetoric continues the ideological assault on these very critical issues of social justice.

The other question I have is about revenue neutrality. It seems to me there could be an argument made for phasing in the neutrality. We can gain some funds from eliminating perverse subsidies to the polluting industries but we need a substantial investment in those things that can save us in the long run - rail infrastructure, retrofitting to achieve zero emission buildings, renewable energy, local food production, etc. I believe we need to use some of the wealth we have in our taxation capability now (while we still have it) to bring these things into being - rather than starving us of the capability to do so by a too rapid reduction in income tax. So, I would support tax shifting that helps people to know that they can save by changing behaviour (fare reduction for public transit, incentives to improve our personal energy use, etc.) but which also gives us sufficient funds to do what needs to be done. I like the Interface Carpets formula of having a 25 year time frame to get the job done.

Jane Sterk
Leader
Green Party of BC