Changing Tack: BC NDP Accelerates Increase in Carbon Tax and Moves Away from Revenue Neutrality
BC’s recently sworn-in New Democratic Party (NDP) government presented its first provincial budget on September 11, 2017. Among the policy measures announced were changes to the BC carbon tax. In particular, the Budget 2017 Update (2017/18 – 2019/20) provides for the following:
- As of April 1, 2018, the carbon tax will increase by $5 per tonne of carbon dioxide equivalent (CO2e) per year until it reaches the federal target carbon price of $50 on April 1, 2021 (one year before Ottawa’s 2022 deadline). BC’s carbon tax is currently set at $30 per tonne of CO2e.
- Part 2 of the Carbon Tax Act has been repealed, meaning that the requirement for the provincial Minister of Finance to prepare the Carbon Tax Report and Plan will no longer apply after September 11, 2017. In addition, this means that the Carbon Tax Act will no longer require that revenue measures be introduced to offset carbon tax revenues. This will allow the government to spend carbon tax revenues on emission reduction measures or other green initiatives, rather than returning carbon tax revenues to taxpayers.
When BC’s carbon tax was first introduced in 2008, it was considered the most comprehensive and transparent carbon tax in North America and abroad. One of the key features under the Carbon Tax Act was the reporting mechanism under Part 2, which required the government to prepare an annual carbon tax plan estimating the amount of carbon tax revenues collected and forecast to be collected, and how such revenues would be allocated. The inclusion of such a reporting mechanism is fundamental to ensuring that carbon tax revenues are subject to a certain level of scrutiny, thus making the government accountable for the use of those revenues. In designing its cap-and-trade system, the Ontario government recognized the importance of transparency to stakeholders when it included a mechanism in the Climate Change Mitigation and Low-Carbon Economy Act which requires money raised from the cap-and-trade program to be deposited into the province’s Greenhouse Gas Reduction Account. Funds from this account are invested in green projects and initiatives that reduce emissions. Prior to the finalization of Ontario’s cap-and-trade program, the legislation was strengthened by requiring enhanced accountability and public reporting on the investment of cap-and-trade proceeds in the province’s Climate Change Action Plan. It is unclear at this time which mechanism, if any, the BC NDP will implement to maintain transparency and accountability for the allocation of carbon tax revenues in the province. Over the coming weeks and months, the BC NDP is expected to articulate its policy priorities on a range of issues, including environmental and climate change matters. Please stay tuned for further developments.
carbon pricing carbon tax climate change revenue neutral