An Open Letter to Kevin Falcon

Kevin Falcon

Minister of Finance

Government of British Columbia

Dear Mr. Falcon,

During your budget speech yesterday, you announced that BC’s carbon tax will be frozen, and its place in our economy reexamined, after its final scheduled increase later this year. Forgive me if I am being presumptuous, but given the tepid support for environmental measures sometimes demonstrated by segments of your government, I fear that the future of the carbon tax may be in jeopardy.

May I suggest instead that you use the opportunity to make it better? This goal, should you choose to pursue it, can be measured by two vital criteria: effectiveness and fairness.

In order to be effective, a carbon tax, rather than being eliminated or frozen at $30 per tonne of carbon dioxide equivalent, must be increased. Quite drastically in fact. Having hardly made a dent in BC’s emissions at present levels, the tax should probably rise to somewhere in the neighbourhood of $100 to $200 per tonne at the very least. Moreover, it should be expanded to cover the roughly 25 percent of emissions (such as natural gas flaring) not currently included.

As for fairness, this can be achieved by compensating — overcompensating even — for any negative impact on those with low incomes. All else being equal, consumption taxes tend to be regressive — that is, they tend to cost the poor a higher portion of their incomes than the rich. According to research done by Marc Lee of the Canadian Centre for Policy Alternatives, BC’s carbon tax does not adequately address this concern. He suggests that fully one-half of carbon tax revenue be channelled into a tax credit for low- and middle-income households (with the remainder going to fund public transit and other environmentally friendly investments).

Another approach is the “fee and dividend” system advocated by climate scientist James Hansen among others, according to which all revenue would be returned to the population on an equal per capita basis. The benefit of this kind of carbon tax is that while the poor would individually pay the least in “fees” (in absolute terms, not as a portion of their incomes) because they emit the least carbon, they would get back just as much as the rich in “dividends.” In other words, this system has a built-in mechanism to make sure that most of those with low incomes come out ahead.

So please consider preserving and strengthening BC’s carbon tax. If you are concerned about its apparent revenue negativity in these tough fiscal times (another drawback pointed out by Marc Lee), a few tweaks could easily turn it into a money maker. What is a tax, after all, if not something that raises revenue? I personally would not miss the cuts to corporate and upper-bracket income taxes that were designed to offset costs to taxpayers, and neither would the majority of British Columbians who do not benefit from them.

The problem of climate change is one whose urgency is growing by the year. Now is not the time to get caught up in some fabricated tax revolt. Now is the time to get serious.

Sincerely,

David Taub Bancroft