Carbon tax era arrives

B.C.’s new carbon tax pushed gas prices up through the psychologically important $1.50 per litre level across much of Metro Vancouver on Canada Day.

The extra 2.34-cent tax took effect July 1, but some stations hiked prices as much as 10 cents.

By Wednesday, average prices in Metro Vancouver were $1.506 per litre and the provincial Liberals remained steadfast the tax is here to stay despite an accelerating “axe the tax” campaign by New Democrats and angry motorists. The carbon tax is slated to rise further to 7.2 cents extra per litre by 2012.

Opponents predict the government won’t stop there.The carbon tax is initially set at $10 per tonne of released carbon dioxide (the extra 2.34 cents on gasoline is derived from that) and rises to $30 per tonne under the current plan. But Mark Jaccard, the architect of the province’s plan, has said the carbon tax may need to reach $180 per tonne to change people’s behaviour.

“That works out to an extra 43 cents a litre,” said Maureen Bader, of the Canadian Taxpayers Federation. “If the premier’s climate change advisors get their way, we could be looking at gasoline prices closer to $2 a litre.”

The province says all money collected from the carbon taxes is returned to B.C. residents and businesses through tax cuts, including a low-income tax credit, meaning those who find ways to burn less fossil fuels stand to gain.

An advance on the tax cuts went out in the form of a $100-per-head climate action dividend cheque last week.

“These are significant savings that will ensure the vast majority of British Columbians come out further ahead after the carbon tax is implemented,” said finance minister Colin Hansen.

But Bader and others contend premier Gordon Campbell’s claim the tax will be revenue-neutral does not hold up.

“The tax cuts the government has engineered will only cover off some of the direct costs of the carbon tax – for those who are able to assume the politically correct low-carbon lifestyle,” she said. “This is a useless tax,” added Consumers Association of Canada president Bruce Cran, who said high oil prices are already spurring change. “This tax will work its way through everything else for sale in the marketplace. Consumers are going to be bearing the burden of this.”

He said the high prices have now reached the point that motorists who need more than $100 to fill up have run into a hitch: some stations have pumps that can’t sell that much, forcing motorists to fill up in two batches.

NDP leader Carole James said she would kill the carbon tax and pursue a cap-and-trade system where big industries would have to either clean up or buy extra allowances for emitting more carbon than permitted.

A coalition of environmental groups have come to the government’s defence, arguing criticisms of carbon tax are rooted in misinformation. They list several “myths” and argue that contrary to opposition claims, the carbon tax will help cut emissions.

They also argue the carbon tax is not strictly a “gas tax” (it also applies on heating fuel and propane), it is not a “tax grab” (revenue is to be returned in tax cuts or credits), and that big industry is not left off the hook.