BC Carbon Pricing

In 2008, BC brought in a world renowned carbon tax, which returns all revenue generated to taxpayers and job creators across the province’s economy. In 2016, the province is reevaluating the system, and we made the following recommendations.

1. Return to regular and predictable increases in B.C.’s carbon tax.

Since the introduction on BC’s carbon tax in 2008 there has been significant global momentum and provincial leadership on carbon pricing. With provinces including Alberta, Ontario and Quebec all moving forward with carbon pricing policies, it is time to reinstate a gradually increasing carbon fee. We urge you to remove the price freeze, and increase the carbon tax in 2018, rising to at least $40 per tonne by 2020, and outline a path to gradually increase the tax slightly faster than the rate of inflation and GDP growth over time, taking account of (and ideally remaining ahead of) carbon price increases in other provinces. A price path that increases the carbon tax by about 10% per year in nominal terms starting in 2018 would allow the tax to reach about $100 by 2030, which is within the range of carbon pricing necessary for Canada to meet its 2030 emission goals if all provinces adopted similar pricing. By setting the right predictable price signal, British Columbia can continue to see further emissions reductions, further technological innovation and deliver greater tax reductions to businesses and households.

2. Maintain revenue neutrality by further reducing taxes on households and businesses.

Canadians for Clean Prosperity would like to see the revenue neutrality requirements continue to be adhered to: broad-based tax reductions focusing on easing the burden on Canadian families and jobcreators. For example, we are supportive of the Leadership Team’s recommendation to lower the PST and eliminate PST on electricity when carbon tax revenues rise enough to enable these reductions. We do believe, however, that niche tax credits such as the digital media tax credit and film incentive tax credits, do not benefit the economy on the whole, and instead ask the government to focus on broad-based economy wide tax reductions and credits.

3. Increase coverage of the carbon tax to cover all measurable emissions.

Canadians for Clean Prosperity would like to see a more comprehensive economy-wide tax, whereby other emissions beyond fossil fuel combustion emissions are brought into the pricing system. This recommendation is supported by the public survey, whereby British Columbians expressed an interest in expanding carbon pricing. The current system covers 70% of provincial emissions, which is commendable; however, this level of coverage must be expanded as other jurisdictions seek to broaden the scope of carbon pricing. As such, we agree with the Leadership Team’s recommendation to expand the carbon tax coverage to all measurable greenhouse gas emissions after 5 years. In particular, we support the goal of reducing fugitive and vented methane emissions by 40% within five years, after which time fugitive and process emissions could be included within the carbon coverage of the carbon tax system. At a minimum, BC should seek to align its methane regulations with proposed methane regulations for Alberta and the new Canada-US commitment to seek methane reductions of 40% to 45% by 2025.

4. Protect emissions-intensive, trade-exposed industries with competitiveness measures.

Pricing emissions is the right thing to do, but we also need to make sure we protect the competitiveness of our businesses that are competing to sell their products with firms from countries or jurisdictions that have not brought in carbon pricing. With more than 80% of the Canadian economy expected to be covered by carbon pricing within the next year, we believe that the federal government has an important and natural role to play in implementing border carbon adjustments or other measures to ensure the competitiveness of Canadian emissions-intensive, trade-exposed companies. As a leader in carbon pricing, British Columbia should encourage federal action on this front so that provincial action on climate change doesn’t disadvantage Canadian businesses. But if the federal government and other provinces are not successfully able to develop a coordinated approach to border adjustments, then we would support the Climate Leadership Team’s recommendation to create targeted and transparent measures to protect the competitiveness of emissions-intensive, trade-exposed firms.

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