Axe the Carbon Tax | BCBusiness
By next year, carbon markets around the world are predicted to be worth some $669 billion.
The BC Jobs and Investment Board wants the carbon tax eliminated in B.C. A better option may be on the way.
The BC Jobs and Investment Board says the B.C. carbon tax is killing jobs and economic activity in the province. It does allow that the tax generates funding – and in eliminating it, the provincial government would have to find another way to make up the difference. The Board implies that the government – whether Liberal or NDP – would never give up the funding. With the provincial books already in trouble, foregoing billions in annual revenue certainly seems unlikely.
The government depends on the taxes it receives from gasoline and other fuels. And it’s a lot easier to fill the coffers with sin taxes like the carbon tax than it is by getting more income taxes from “jobs” that may or may not be created. But is this really the case? There is a way out of this mess that will protect government revenue and eliminate the carbon tax. It’s cap-and-trade.
Cap-and-trade is a system where government imposes a limit, or cap on carbon emissions for each industrial sector, which is then divided amongst sector companies. The government sells credits for the carbon dioxide (CO2) emissions a company emits. Companies that don’t reduce emissions must purchase credits that equal the overage. Companies that reduce emissions can sell credits to companies that don’t. A credit is usually equal to one metric tonne of CO2.
Some companies need more credits while others don’t need them all because they have cut emissions. Credits are also issued for practices that reduce carbon emissions by creating oxygen, such as tree planting and intensive farming. In addition, these credits can be traded on a public market. A similar system has been in place in Europe for the past five or six years, but it hasn’t caught on in North America, despite repeated attempts by various factions.
In the new year the state of California is starting a cap-and-trade system, which will instantly create one of the world’s biggest carbon markets, worth somewhere in the neighborhood of $8 billion a year, for starters. By next year, carbon markets around the world are predicted to be worth some $669 billion.
Quebec has already signed up on the California market, and a few other provinces and U.S. states are considering it. B.C. hasn’t participated yet – it’s been easier to grab revenue through a direct tax, and until now there weren’t nearby exchanges to trade carbon credits.
If B.C. really wants to protect the environment and generate revenue, this may be a better way than sticking with a worn out carbon tax. Sure, prices of some commodities will go up. Then it’s up to the buyer to pay the new prices or not. What the cap-and-trade system won’t do is hit them directly every time they fill up their gas tanks.