A commentary by a professor emeritus at the University of Victoria.
Are we about to consign to the dustbin smart action on global warming in Canada? The federal machinations in Ottawa in the last fortnight, buttressed by opportunistic conservative and New Democrat premiers, suggest that the answer to that existential question could be yes.
We must not let that answer stand, for it would mean surrendering to the global warming assault now so firmly upon us.
But more than that: weakening our carbon tax telegraphs collective Canadian amnesia to the world. It tells all other countries that far too many of us are unaware of the structure of the recent federal carbon tax and have already forgotten the success of its remarkable precursor put in place 15 years ago: British Columbia’s carbon tax and Climate Action Plan.
Remembering that provincial history is critical to ensuring that we fight the good fight on the federal stage.
In 2008, Premier Gordon Campbell’s right-of-centre government legislated the world’s first revenue-neutral, broad-spectrum, accelerating carbon tax and coupled it to an action plan that included a suite of smart regulatory changes. The package was revolutionary and its success was nearly immediate.
Relative to the rest of Canada, per capita emissions in B.C. fell by 19 per cent by 2012, and our economy grew faster than the Canadian average, achievements attributable largely to the tax structure.
First, the carbon tax was revenue-neutral, a key stipulation. By law, every penny of B.C.’s initially modest carbon emissions tariff had to be returned to the citizenry.
To do so, provincial income tax rates on the bottom two strata of our progressive income tax system were cut five per cent; the corporate business tax rate was cut two points; and cash subventions were provided to low-income residents.
As a result, by 2009 B.C. had the lowest income tax in Canada on net earnings up to $110,000; we had amongst the very lowest corporate income taxes in the OECD; and less well-off families were receiving direct cash payments of hundreds of dollars per year. These provisions guaranteed that the fiscal impact of the carbon tax was essentially erased for most British Columbians.
Second, Finance Minister Carole Taylor and Campbell both insisted that there be no exceptions to the tax. Taylor was firm: “I felt very strongly that it had to be universal; it had to be a system that didn’t have exceptions … you can’t buckle,” she told me. Campbell was of the same mind, noting that the B.C. business community “didn’t want any exemptions.”
Third, the tax was scheduled to increase year-after-year through 2012 at a modest bump of $5 per tonne of carbon dioxide emitted, equivalent to about a cent and a quarter on a litre of gasoline. That provision offered a degree of fiscal certainty while giving the business community and citizens both time to adjust their fossil-fuel consumption habits.
And finally, the structure offered a built-in climate-action incentive: any citizen or business that reduced emissions paid less carbon tax but continued to benefit from the lowered income taxes or cash subventions. What the Campbell government did was to shift the tax burden off income and onto pollution. It was brilliant.
But it wasn’t all roses. In the following years, enthusiasm for the carbon tax began to sputter, a victim of benign political neglect.
Campbell’s government failed to trumpet, at every opportunity, that the carbon tax was putting extra money in the pocket of every British Columbian who reduced his or her carbon emissions.
A year or two after the tax took effect, few remembered that their income or business tax had declined. And if they were low-income citizens, they were not reminded — and typically did not even know — that the carbon-tax rebates that they received directly were embedded in their quarterly GST refund cheques.
That communications failure allowed nefarious actors to shout that the carbon tax was nothing more than a tax grab. Cries of “axe-the-tax” resonated, shamefully, from opposition pulpits.
And as the critically-important revenue-neutrality centrepiece of the tax faded from public view, the next conservative premier, Christy Clark, was able to freeze the tax in 2013 without significant public outcry.
Here we are, many years later, now on the federal stage, about to let that history repeat itself.
Prime Minister Justin Trudeau did himself no favours just before Halloween when he announced that his government would carve out a federal carbon-tax exemption for home heating oil in the Atlantic provinces.
Campbell, a conservative, would surely have fought that, but Pierre Poilievre, also a conservative, shamelessly pounced. Within hours, he was using Trudeau’s gaffe in support of his campaign to “axe Trudeau’s job-killing carbon tax.”
And predictably, premiers from Ontario and the West demanded that their provinces, too, receive such largesse from the federal Liberals. But none of them — not one! — had the spine to point out that the lion’s share of carbon-tax revenue generated by home heating oil sales in Atlantic Canada or hydrocarbon sales in their own provinces is returned to citizens, thanks to significant rebate provisions built into the federal carbon tax structure.
Indeed, a Nova Scotian family of four will receive a carbon tax rebate of $992 this fiscal year. Moreover, that family can access additional subventions and interest-free loans that will allow them to get rid of their oil furnace, install a low-emissions heat pump, and save money.
That’s all good news, but we hear little about it. Instead, media soundwaves are dominated by “axe-the-tax,” an infantile slogan that preys on a collectively weak understanding of the carbon tax structure.
So why aren’t we hearing about carbon tax rebates from the prime minister and his caucus members every day? Why are those reimbursements nearly invisible to most of us? The government needs to up their messaging: “You are getting your money back, and if you make climatically wise choices, you’ll have even more money in your pocket.”
Prime minister, lead with that. It’s the truth, so say it over and over again. Don’t fall victim to the same communications deficit that the Campbell government did over a decade ago.
You have a smart policy. Stick to it. Market it.
And one last thing, sir. Forget the exemptions. Your hard-won, revenue-neutral, broad-spectrum, accelerating carbon tax is a template for the world. Please leave it alone.
Thomas F. Pedersen served as the initial executive director of the Pacific Institute for Climate Solutions at the University of Victoria from 2009 to 2015. He has recently completed a book on the political history of carbon taxation in British Columbia and Australia that focuses on the key decade 2007-2017.
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