Canada Proves a Revenue Neutral Carbon Tax Can Work
Back in 2008, British Columbia (BC), Canada implemented a revenue neutral carbon tax. The basic idea is to tax carbon pollution and use the revenue to lower other taxes. According to a new paper to be published in Canadian Public Policy, results show the revenue neutral carbon tax has been a clear success. Carbon pollution is down significantly compared to the rest of Canada while the economy performed on par with the rest of the country. The reports key findings:
• Since the carbon tax took effect (July 1, 2008), BC’s fuel consumption has fallen by 17.4% per capita (and fallen by 18.8% relative to the rest of Canada).
• These reductions have occurred across all the fuel types covered by the tax (not just vehicle fuel)
• BC’s GDP kept pace with the rest of Canada’s over that period of time
• The tax shift has enabled BC to have Canada’s lowest income tax rates (as of 2012).
• The tax shift has benefited taxpayers; cuts to income and other taxes have exceeded carbon tax revenues by $500 million from 2008-12.
There is the obvious environmental argument for a revenue neutral carbon tax, but there is also a decent conservative argument for it. A carbon tax is superior to an income tax. It makes far more sense to tax people for polluting than it does to tax people for working hard.
Even if you claim to be skeptical about the scale of man-made global warming, there is no doubt the most common sources of CO2 – gasoline, diesel and coal – harm people. A carbon tax should have the added benefit of helping to reduce these pollutants.
In a sane world this basic idea would have significantly more support than it currently does.