Thursday, July 28, 2011

Carbon Conservatism in British Columbia

I have been pilloried in the comments section of this blog before for my support for a carbon tax. It is not because I believe in catastrophic AGW that I support a carbon tax, but because it would help reduce air pollution and could be used to lower income tax rates. Turns out that British Columbia has already gone this route. As opposed to disastrous cap and trade schemes proposed by Democrats or California's horrendous AB32 that targets specific sources of power, this tax is technology agnostic, allowing the free market to influence the best way to reduce carbon based power consumption, whether through conservation, shifting to natural gas or some other means. But best of all the economy has not been harmed, because our northern neighbors on the left coast have used the proceeds to, drum roll please, reduce income taxes for individuals and corporations. I believe that the burning of carbon based fuels is the primary source of air pollution in the world and reducing those emissions is a worthy goal.

The effects on the British Columbia economy of the Carbon tax, implemented in 2008, appear to have been minimal. I believe this is because it was used to offset income taxes. The tax is simple and easy to administer, and has been implemented in a predictable manner; unlike recent tax code changes in the United States. The U.S. income tax is a nightmare of complexity and pork barrel politics. Reducing our federal government's dependency on it, by replacing it with what is essentially a consumption tax also seems like a worthy outcome.


  1. As a resident of British Columbia and student of the economy , I can agree that the BC carbon tax has been a good idea and should be more widely implemented. And I think i would be more widely proposed and implemented if not for the fact that cap-and-trade is a market based permitting system, rather than a tax structure. The theoretical results of both systems is the same, although cap-and-trade is more complicated to implement.

    The reason why cap-and-trade gets more press than it should is because of knee-jerk Norquistian opposition to the word 'tax' on the right and "consumption taxes are regressive"-ism on the left. It's refreshing to see someone on the Tea side of things come out in favor of what is a rational tax system.

    As for BC Politics, I wouldn't quite crack up the BC Liberal administration as 'conservative' but more as liberal. They have conservative supporters in some quarters, but that's mostly to stop BC's (actual) socialists.

    If you've ever heard of the 'Green Shift" plan, from the Liberal Party of Canada (no relation to the bc party) proposed in 2008 election, the, quite leftish by american standards, liberals proposed to use carbon taxes to replace income and consumption taxes in Canada. It was quite a bold move. It was also pilloried by the Canadian Conservative Party.

    Anyway, i'm sure more on the left would be willing to promote Carbon taxes over cap-and-trade and the worst option command-and-control if there wasn't such a knee jerk reaction to the tax bit.

  2. Calivancouver,
    Thanks for the local insight. I didn't mean to imply that the tax was proposed by conservatives, but apparently I did.

    There are huge differences in practical terms between "cap and trade" and carbon taxes. I have blogged about the absurdity of cap and trade before. In summary, the system is highly susceptible to fraud, its structure is hard to administer and it tempts politicians to hand out permits to favored groups.

  3. I agree entirely on the bit about the inefficiency of cap-and-trade, simply considering the infrastructure required to measure one's own pollution, versus the efficiency of slapping a scientifically derived tax on carbon based fuels.

    Another interesting selling point for the BC carbon tax is that the minister responsible promised that it would be revenue neutral by mailing out rebates to lower income residents to cover excess collection. it was backed with a provision that should the tax not be revenue neutral, he would not be paid