Castanet

The Canadian province of British Columbia implemented a carbon tax on certain fossil fuels in July of 2008. Some experts and pricing proponents are using the British Columbia carbon tax example to promote carbon taxes and other market mechanisms as a way to purportedly reduce greenhouse gas emissions and address our climate problem. Unfortunately for these free-market proponents, the real-world record fails to demonstrate that British Columbia’s carbon tax reduced carbon emissions, fossil fuel consumption or vehicle travel. Most of the modest and short-term reductions in emissions seem to be related primarily to the 2008 global recession, not to the carbon tax. More recently, British Columbia’s emissions have resumed their rise.

Emissions from driving are rising faster than population growth in B.C., despite a carbon tax higher than Inslee’s proposal.

Recent data says emissions increased 2.3 percent from 2013 to 2015. That includes a 7.2 percent increase in transportation emissions, the main focus of the B.C. and Washington plans.

B.C. won’t meet its 2020 carbon-reduction goals. Tax advocates there insist it works, but they’re seeking an overhaul and rate increase in hopes of meeting future climate goals.

Environmental group Food and Water Watch examined effects on the 70 percent of fuels subject to the tax. It concluded B.C.’s tax is a “failed experiment” and proponents “have significantly overstated the purported beneficial effects.”

“Greenhouse gas emissions have been rising rapidly in recent years even as the tax rate and total tax revenues have increased,” it said. “Moreover, the short-term declines in taxed greenhouse gas emissions were more modest and were reversed more quickly than the changes to the untaxed greenhouse gas emissions — exactly the opposite of what would happen if carbon taxes had a causal impact on changing emissions.”

B.C. introduced a $10-a-tonne carbon tax in 2008 and raised it gradually to $30-a-tonne by 2012. That’s just slightly higher than the $25-a-tonne carbon tax Manitoba plans to implement on Sept. 1.

B.C.’s carbon tax translates into a 6.7-cent a litre tax on gasoline, as of 2012. But instead of causing people to alter their consumption behaviour and use less gasoline, sales there have skyrocketed. They’re not burning less gasoline in B.C., their burning more. Far more.

In fact, gasoline sales in British Columbia have skyrocketed over 23% between 2012 and 2016, well above the total sales increase for Canada during that period of 3.5%, according to Statistics Canada. Most other provinces didn’t have carbon pricing as of 2016. Alberta brought in a carbon tax last year and Ontario introduced its cap-and-trade system in 2017.

In 2012, gross sales of gasoline in British Columbia topped 4.68 billion litres. That includes gasoline for on-road and off-road vehicles, including in farming, forestry, construction and mining. By 2016, that number jumped by more than one billion litres to 5.77 billion litres – a staggering 23.3% increase.

By contrast, gross sales of gasoline for all of Canada was just over 42 billion litres in 2012 and 43.5 billion litres in 2016, a 3.5% increase.

In fact, total gasoline sales in Canada dropped in 2016. But not in B.C., where it grew faster than in any other province, despite the carbon tax.

“Gross sales of gasoline for which road taxes were paid dropped 2.4% in 2016 to 43.5 billion litres,” StatsCan reported in August 2017. “Gross sales of gasoline in Canada were down by 1,061.2 million litres in 2016. The province with the largest gain in volume was British Columbia (+289.0 million litres).”

So it’s a myth that if government adds a small tax to gasoline, like B.C.’s carbon tax, that it sends enough of a price signal to consumers to reduce their consumption. It doesn’t. And there’s enough data out of B.C. now that proves it doesn’t work.

There would have to be a much larger price signal for it to work, well beyond the Trudeau government’s planned $50-a-tonne carbon tax – which would translate into an 11-cent per litre tax at the pumps. But a significantly higher tax would cause massive economic hardship and disruption, especially for lower-income Canadians who would be disproportionately affected.

Which is why a carbon tax is a poor public policy tool. It doesn’t work at all when it’s too low and any benefits that may arise from a $100 to $200 per tonne tax would be more than offset by crushing economic outcomes.

What the B.C. and soon-to-be carbon tax in Manitoba is really about is establishing new revenue streams for government under the pretext of being green. We know from the experience in B.C. that a $30-tonne carbon tax does nothing to reduce consumption. Yet politicians here and in other provinces, as well as at the federal level, keep pretending it does. They do so because they can’t resist the new revenue opportunity.

BGrigg07 wrote:We must always remember the differences between a tax and a fine, namely:

"A tax is a fine for doing good, while a fine is a tax for doing bad".

rustled wrote:

BGrigg07 wrote:We must always remember the differences between a tax and a fine, namely:

"A tax is a fine for doing good, while a fine is a tax for doing bad".

When a first world country decides those living even the most modest of lives should be fined for purchasing, storing and preparing their groceries, for heating and lighting their homes, and for earning a living, something is terribly wrong.

BGrigg07 wrote:Oh come now, taxing and fining people isn't limited to the first world! Every government does it in some way or another. It's how the world goes round. Or would you rather pay tolls every 50 feet to use a road or sidewalk? That's how it used to be done... Somebody has to pay for hospitals, roadways, schools, police, fire, etc. etc. and it's better if all of us pay our fair share.

I'm just pointing out that in reality there is no actual difference between a fine and a tax.

I'm not a fan of Carbon taxes, and I don't think they work to reduce people's consumption of fossil fuels, any more than income tax reduces employment...

casey60 wrote:Great timing by the Feds to put a carbon tax on the todays $1.50 gas prices. Way to go sunnyboy.