Carbon tax no cash cow in its first year

DERRICK PENNER,
Vancouver Sun
June 10, 2009

The provincial government paid out $38 million more in carbon tax breaks to British Columbians than it collected in carbon taxes in the first year of the climate-change initiative's implementation.

However, how much British Columbians reduce their carbon production won't be known until the province starts reporting its emissions figures to the federal government in the coming years, a conference on the carbon tax heard Tuesday.

"That [reporting] hasn't started yet," said John Robinson, one of the conference co-chairs. "The next few years will tell the tale."

Another difficulty, Robinson added, is that it will be difficult to tell how much of carbon reductions that B.C. sees will be related to the tax, and how much should be attributed to other factors.

The simplest measure of reduced carbon emissions will come from a reduction in energy use, Robinson said, and there won't be "a flashing green light saying [this part of the reduction] is caused by the tax."

The conference, titled Decoding Carbon Tax Pricing, is being staged by the Pacific Institute for Climate Solution, a collaboration of the University of Victoria, University of B.C., University of Northern B.C. and Simon Fraser University around the first anniversary of the controversial tax.

The intent of the conference, which began Monday and runs through today, is to review what industries and institutions are doing in response to the tax and to other B.C. climate-change initiatives.

Robinson, a professor at the Institute for Resources, Environment and Sustainability at UBC, said B.C. appears to be coping fairly well with the carbon tax in its first year.

Although the tax is intended to be revenue-neutral, British Columbians actually received more money out of the climate initiative's attendant tax cuts than the provincial government received in carbon tax revenue.

Glen Armstrong, assistant deputy minister in the finance ministry outlined those numbers from the February provincial budget.

The provincial budget showed $300 million in carbon-tax revenue for fiscal 2008-09, some $38 million less than estimated due to factors including lower than expected gasoline consumption.

However, the income tax cuts associated with the carbon tax to make sure the initiative was not a cash cow for government totalled $338 million -- 70 per cent of which went back to individuals.