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pathway   Home arrow Environment News arrow BC Finance Minister pushing for a carbon tax

BC Finance Minister pushing for a carbon tax
Brave B.C. talks true carbon tax
PATRICK BRETHOUR, GLOBE & MAIL
October 26, 2007

VANCOUVER -- Stephen Harper and Stéphane Dion won't do it, and most Canadian politicians won't even say it out loud.

But in British Columbia, Finance Minister Carole Taylor is merrily pursuing a carbon tax, eyeing a plan that could see the province levy substantial fees on economic choices that spew greenhouse gases, but that would slash other kinds of taxes, including income taxes.

That is the precise policy that market-minded environmentalists and environment-minded economists have long urged, since only pain in the pocketbook - not feel-good ad campaigns, not loophole-riddled regulations - can force the changes in consumer and business behaviour needed to curb climate change. The economic logic of a carbon tax is impeccable; the politics, however, have been unpalatable.

Except in B.C., where Ms. Taylor and the notionally conservative Liberals are suddenly pilfering the policy book of the Green Party. She's a bit lonely arguing the case of short-term pain for long-term green gain. "So, there I am ..." Ms. Taylor says with a laugh, before turning back to the less jovial matter of the provincial tax code.

Ms. Taylor takes pains to stress that no decisions have yet been made. But the mere fact that the Finance Minister is even talking aloud about a carbon tax sends two clear messages. First, the province is serious about tackling climate change, even if other parts of its environmental record are decidedly less green. Second, the government is not afraid to say what everyone knows: Consumers, not just businesses, will have to bear the costs of reducing greenhouse gases.

The straight talk is a marked contrast to Quebec and its faux carbon tax that came into effect earlier this month. It is an anemic effort, designed to generate just $200-million a year. More to the point, the Quebec government took the questionable position of reassuring voters that companies, not consumers, would pay the tax. That is impossible since added costs will flow through to the consumer, particularly in a commodity business such as retail fuels. The attempt to argue otherwise simply underscores how frightened most governments are of asking Canadians for even a minimal sacrifice - and highlights just how radical a path British Columbia is contemplating.

Ms. Taylor will make her decisions about taxes and incentives in the next two months, and all fiscal measures will be announced in February. If any industry is hoping for a repeat of Alberta's greenhouse gas legislation, in which few were asked to do a little over a long time, it should prepare for painful disappointment.

Premier Gordon Campbell has promised a 33-per-cent reduction in current greenhouse gas emissions by 2020, and the government intends to deliver just that. "We will not be able to take little, tiny, tentative steps," Ms. Taylor says. "We are going to have to be very aggressive in our policies and our actions."

What can business expect? The short answer is added costs, and soon. Already the energy industry faces tighter regulations on flaring natural gas, with the new rules kicking in in just over two months. There will be a phase-in period for any new taxes, but Ms. Taylor says any delay will be because of the complexity of the changes. The Premier has laid out a target to hit 13 years from now, but the province is already drawing up interim goals. This will be an issue for the next fiscal year, not something to pass off in the footnotes of forward-looking risks in the next annual report.

B.C.'s actions might include a tax on the production of oil and natural gas, sure to be a hit with an industry still reeling from the royalty uprising in Alberta. It could also mean a fuel tax, equally popular for drivers only now seeing pump prices dip below $1 a litre.

However, the government is also looking at balancing cuts to other levies, including income taxes. Some of the funds raised from carbon taxes might also be used to pay for green projects. The goal is for the changes as a package to be revenue-neutral, at least from the viewpoint of the government. Ms. Taylor says she realizes the peril of using a carbon tax to boost general revenue and that tax-shifting will be her approach.

But what is true over all won't necessarily hold true for individual consumers and businesses. Green choices could easily mean a lower total tax bill. Ms. Taylor might call it tax-shifting, but it could easily be renamed a do-it-yourself tax cut - green, in both senses of the word.


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