isramart : A 50 cent carbon tax

isramart news:
Did you fill up your tank before July 1? That’s when the provincial carbon tax increased by 50 per cent, from 2.4 cents per litre to 3.6 cents per litre. Get used to it, the tax will increase next year, and the year after.

Similar increases apply to diesel, natural gas and other fossil fuels, each July 1 until 2012 when they will represent a tax of $30 per tonne of greenhouse gas emissions.

Richmond MLA John Yap, B.C.’s new minister of state for climate action, referred questions about the carbon tax to the finance ministry last week. He said he is aware of the ongoing scientific debate about climate indicators, but evidence such as the unchecked spread of pine beetle show that inaction has its own risks.

“There is a cost to leadership,” Yap said. “That’s the reality, but in the long run, we believe it is the right thing to do for our environment to deal with global warming, and it’s the right thing to do as well for our economy.”

The idea behind the carbon tax is simple – make the price of gas prohibitive and the result will be that British Columbians don’t drive as much.

It makes sense. However, there doesn’t seem to be any tracking, by the provincial government, to see whether people actually are driving less i.e. whether the tax is working. There is lots of talk about how it’s the right thing to do, but do we really know if it’s working?

We would suggest that, at the current price of gas, it isn’t working. Ask yourself – have you curtailed your driving habits in the past year because of the carbon tax? We would suggest that the vast majority of British Columbians would answer “no.”

For a carbon tax to be truly effective it has to be truly punitive, something no government is willing to do because it is tantamount to price controls.

For a carbon tax to be truly effective, we need to know the level at which the price of gas actually results in people changing their driving habits. Is it $1.50 per litre? Is it $2 per litre? $2.50 per litre?

When the price of gas drops, which it has since last summer, the carbon tax becomes ineffective. It’s just a tax and, despite what government says about it being revenue neutral, there is always a cost.

For the carbon tax to achieve its goal of changing our driving habits, it has to keep the price of gas at a level that accomplishes that. If it is determined that $1.50 per litre will actually change our driving habits then a carbon tax, to actually work, should be on a sliding scale to maintain that price.

In other words, if the actual price of fuel is $1 per litre, then the carbon tax should be at 50 cents per litre to achieve the desired effect.

Just for the record – we are not advocating such a move. And, no government would do so because it is political suicide. The NDP made hay with their “axe the tax.” Imagine the debate over a 50 per cent carbon tax.

Our point is our carbon tax will steadily increase over the next few years without any idea of whether it is actually working. In fact, we suspect it is not changing our driving habits.

If the goal of the carbon tax is to alter our driving habits, then we have to either make it work or shelve it. Since government is unlikely to actually put the carbon tax at a level that changes our habits, opting instead to keep it at a level where the political damage is manageable, then it should simply get rid of it.