Carbon Taxes: Tax What You Burn, Not What You Earn
Carbon taxes are based on fossil fuel carbon content, and therefore tax carbon dioxide emissions. In July 2008 British Columbia introduced the first carbon tax in North America. This paper evaluates this tax.
BC’s new tax reflects key carbon tax principles: it is broad, gradual, predictable, and structured to assist low-income people. It begins small and increases gradually, allowing consumers and businesses to respond with increased energy efficiency. Revenues are returned to residents and businesses in ways that protect the lowest income households. Like most new taxes, the carbon tax has been criticized, but much of this criticism is technically incorrect or exaggerated. Consumers have many possible ways to conserve energy and therefore reduce their tax burden. Since lower-income households tend to consume less than average amounts of fuel and receive targeted rebates, most low-income households will benefit overall.
This tax supports economic development by encouraging energy conservation which keeps money circulating within the regional economy. British Columbia’s carbon tax shows true leadership. If other jurisdictions follow, its impacts and benefits will be huge.
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