B.C. budget hikes fuel costs with new carbon tax
Budget details now appearing (the post above appeared at 4:18 local)
carbon-based fuels — including gasoline, diesel, natural gas, propane, coal and home heating fuel — will be taxed at $10/tonne of greenhouse gases generated, starting July 1, 2008.
and then will rise by $5/tonne a year for the next four years
At the pump that means 2.4c per litre, which will hardly make much difference as it bounces around by more than that every week. (One forecast has gas prices going up 10/l in the next two weeks!) It is said to be “revenue neutral”. While the tax reductions in personal income tax and corporate taxes do not kick in until 2009, in June the government will issue a $100 rebate to every adult and child in the province to offset the cost of the carbon tax.
The province [will] teach the rest of the country what it means to tackle global warming.
By widening a freeway! She is still spinning the line that it will reduce idling – which is untrue and was debunked two months ago by Environment Canada and Health Canada – never mind what the environmentalists have been saying for much longer.
You can also see the official version
UPDATE Wednesday February 20
From today’s Vancouver Sun
The $370 million announced [for increased transit spending] Tuesday represents less than eight per cent of that total. [The Province says it will spend $4.75bn out of $14bn needed for its transit plan. This includes the $2bn being spent now on the Canada Line]
It is also dwarfed by the nearly $1.9 billion the province is planning to spend over the next three years on new roads, bridges and other transportation infrastructure.
The Gateway Program alone, which includes plans to twin the Port Mann bridge, is scheduled to receive $438 million in funding over the next three years.
Taylor said the share of transportation funding that goes to transit versus roads will rise in coming years.
“That number will grow as the plans get developed, as consultations with municipalities get concluded and we can do actual construction,” she said.
Taylor also said that the Gateway Program will help promote the province’s transit plans – by allowing bus service across the Port Mann – as well as reducing idling by cars stuck in traffic.
“If you get traffic moving, that would help in terms of the usage of fuel and the carbon emissions,” said Taylor.
That is a very big “if”. The “traffic moving” effect will be at best short lived, and will be overcome by the increase in induced traffic and the effects of changes in future land development patterns. The responses to the EA produced by Environment Canada and Health Canada cite a number of sources which show the fallacy of Taylor’s assertion. I also think the data produced an on a regular basis by the Texas Transportation Institute (all from US experience, of course) is salutory.
And, of course, as we keep saying , you could do a bus service across the Port Mann now. Easy.
Do you have any specific criticism of this plan, aside from the fact that 7 cents/litre on gasoline is not enough of a deterent? It seems like a fairly progressive step to me, while still being palatable to the masses. It will contribute to the existing incentive to buy fuel efficient cars, although it probably won’t drive people to transit. It will handicap coal and natural gas-generated electricity generation making ‘renewables’ more attractive. By waving the provincial sales tax on energy efficient items, it effectively knocks 7% of their price. As for the new bridge over the Fraser, something needed to be done; perhaps rail or some other option would have been better, but until Utopia emerges, we still have to live in this world, and in this world, the Port Mann bridge is busy and a hindrance to transportation. Hopefully the tolls (and expensive gasoline) will encourage people to either take mass transit or live closer to work, but I don’t believe making people suffer in traffic for 3 hours per day is an effective environmental policy.
ChrisC
February 19, 2008 at 6:33 pm
Agreed that people won’t notice the 2.4 cents/litre at the pump.
Ron C
February 20, 2008 at 12:23 am
It is a start. As far as it goes it is good. But it is not as you say 7c/litre – it will be 2.4c/litre initially.Prices at the pump are going to continue to rise simply because there is no more cheap oil and demand worldwide continues to rise. So the marginal effect of the carbon tax on behaviour – trip making – is unlikely to be very significant.
All the gains that have been made from increased fuel efficiency in motor vehicles in recent years have been more than offset by the increase in distances travelled. So we need a strategy that not only makes carbon more expensive but also one that gives people a way to get around that allows them to use less of it. Building more freeway is not consistent with that objective – and that is what I criticise.
The Livable Region Coalition has produced alternative solutions to the twinning of the Port Mann and they are cheaper and more effective – and far from utopian. Widening the freeway and twinning the bridge will not cure congestion – it never has done anywhere and even this government concedes you cannot build your way out of congestion.
Nobody “makes people suffer in traffic”. That is a free choice – based on a large number of factors. The only compulsion at work here is the refusal of this government to switch its spending from roads to more transit – and the refusal to build transit in anticipation of population increases which we know are inevitable.
My other concern, not expressed initially, is the extent to which the current Minister of Finance can commit future ministers to follow the same path. All of these budget forecasts are about future years well beyond this government’s mandate.
Stephen Rees
February 20, 2008 at 8:09 am
As I mentioned in my blog, I find the ‘using new shoes while unveiling the new budget’ extremely hypocritical. But I haven’t had a chance to analyze the budget itself, so I appreciate your analysis.
Raul
February 20, 2008 at 8:27 am
I’m a bit skeptical of this. The government will give other tax breaks to offset the carbon tax, so that it can be revenue neutral? If I know gas is more expensive, but my other taxes are less, then why would I ever be concerned about paying more for gas? It doesn’t make any difference to my bank account in the end. Sounds to me to be clowning around at best, and at worst, a way to subsidize corporate tax cuts.
Maybe I just don’t understand the dynamics of consumer choices. One thing it will do for people like me who never drive, is that I get to put $100 in my pocket. Finally I’m getting some credit for making sensible choices.
I really don’t understand this idea of revenue-neutral taxes. That’s like a guy selling candy bars on the street at cost and congratulating himself for not turning a profit. What gives? If you’re going to collect taxes, you might as well have some revenue.
Paul Holden
February 20, 2008 at 10:14 am
Most commentators agree that in order to influence consumer behaviour a carbon tax has to be around $30 per tonne.
The idea of tax shifting is simple. Instead of reducing your disposable income (which is what an income tax does) tax is levied on spending, and is going to be heavier on those who produce the most CO2. So, as you observe, someone who does not drive at all wins. Someone who drives a Hummer, and continues to do so, loses. Someone who used to drive an old minivan with a 3 litre V6 engine, but buys a new small car with a 1.5 litre engine, and reduces the amount of driving he does, can break even or better over time.
Will the Hummer driver change? Well if he can write off the cost of his vehicle and travel as a business expense, and he makes a huge salary as a corporate CEO, a couple of pennies on gas will not show up in his calculations. But some corporate CEOs have already chosen to drive a Prius – the “optics” are better. No doubt as the Prius becomes more common they will look at the more exotic options to get more press coverage.
Stephen Rees
February 20, 2008 at 10:30 am