Isra-Mart srl: Carbon tax rises tomorrow at the pump

Isra-Mart srl news:
Few people bought the Campbell government’s 2008 promise of a revenue-neutral B.C. carbon tax, but as its second annual hike approaches, tax credits have shelled out more than the tax brought in.

Tomorrow is the levy’s second birthday and like a toddler, it gets a bit bigger every year. The tax on a tonne of carbon dioxide will go up from $15 to $20 this year. The hikes are scheduled to top out at $30 a tonne in 2012.

When the tax was introduced in 2008, fewer than one in five B.C. residents believed it would be revenue-neutral, Angus Reid polling showed at the time. But a set of income tax and other credits introduced alongside the levy has funnelled more back into taxpayers’ wallets than they paid for emissions.

In the last fiscal year, the tax netted $542 million for the province, well below projections made in 2008. At the same time, the value of the credits surpassed expectations, leaving the program $225 million short, with much smaller deficits projected for the next two fiscal years.

It’s not quite what the government planned, but Finance Minister Colin Hansen said the program is erring on the right side.

“If we had to have flexibility, we wanted to make sure it was on the benefit side,” Hansen said. “We wanted to make sure we were over and not under.”

While the tax program is in the red, it’s still too early to tell if B.C. residents are going green.

At the pump, the tax will jump today from 3.33 cents to 4.45 cents on each litre of gasoline, netting the provincial government about $45 million to $50 million in fresh revenue.

The tax has done little to curb gasoline use, though. People in the province bought virtually the same amount of gasoline for car and other motors last year as in 2007, the last full year before the carbon tax, according to Statistics Canada.

Environmentalists point to promising institutional examples, such as the University of British Columbia’s plans for emission reductions and the Whistler municipality’s sustainability programs, as initiatives encouraged by the carbon tax.

But Matt Horne, a policy expert with the Pembina Institute, an environmental think tank, said even with today’s hike, the current tax level simply isn’t enough to drive individual behaviour.

“We’re still only talking, [tomorrow], $20 a tonne. It has a pretty minimal impact on gasoline prices,” Horne said, adding that research indicates a $200-a-tonne tax would be needed across Canada by the end of the decade for the country to carry its weight in reducing global emissions.

Before that can happen, Horne said, advocates will need to be able to point to more examples of transit systems improved and emissions reduced — something he expects to see before the rate hits $25 a tonne next year.

“To talk about $200 a tonne and still not be able to point to those examples, that’s going to be a hard conversation. As soon as we can start pointing to success X, Y and Z, that will be manageable.”