Think Tank: British Columbia Carbon Tax Not Revenue Neutral Think Tank: British Columbia Carbon Tax Not Revenue Neutral

by Mike Godfrey,, Washington

20 February 2017

British Columbia’s carbon tax is no longer revenue neutral and could result in almost CAD900m (USD687.7m) in higher taxes over the six-year period to 2018-19, according to a new study by think tank the Fraser Institute.

The carbon tax was introduced in 2008 at CAD10 per tonne of CO2 equivalent. To offset the revenue raised, the Government reduced personal and business tax rates and introduced a new tax credit for low income earners.

The carbon tax was gradually increased to CAD30 per tonne in 2012. Last year the Government said that the carbon tax will only rise if it remains revenue-neutral and every dollar is returned to residents in the form of tax relief.

According to the Fraser Institute, the province’s carbon tax ceased to be revenue neutral in 2013-14 “because the Government no longer provided new tax cuts to sufficiently offset the additional carbon tax revenue.”

It said: “Beginning in 2013-14, the Government started counting as offsets a number of existing tax credits that pre-dated the introduction of the carbon tax. Indeed, some of the tax credits date back to the 1990s.” It calculated that, once the pre-existing tax reductions are excluded, British Columbia taxpayers “paid CAD226m in increased taxes in 2013-14 and CAD151m in increased taxes in 2014-15.”

The Institute added that the Government had in fact estimated that the carbon tax will result in a cumulative CAD865m tax increase between 2013-14 and 2018-19.


Published at Mon, 20 Feb 2017 00:00:00 +0000