Myth: The carbon tax is just a tax grab.
Fact: Every dollar raised by the carbon tax is returned to individuals and businesses through tax reductions. None of the carbon tax revenue is used to fund government spending.
Since it was first introduced in 2008, the carbon tax has returned $500 million more to taxpayers in tax reductions than it has raised in revenue.
Fact: Industry is not exempt from the carbon tax. Industry is required to pay the carbon tax on the purchase and use of fuels the same as everyone else and they also pay tax at the same rate. For example, the oil and gas industry will pay the carbon tax on all combustion of fuels, estimated at 85 per cent of their total emissions, including flaring, and the cement industry will pay the tax based on the coal and tires they burn in the production of cement.
Fact: The carbon tax has the broadest base possible given current technological, measurement and data limitations and applies to virtually all emissions from fossil fuel combustion in British Columbia captured in Environment Canada’s National Inventory Report.
The Province will look at options to extend the carbon tax to emissions beyond those generated by the purchase and use of fuels, and integrate the carbon tax with other climate action initiates such as cap-and-trade.
Fact: A major component of the personal and business income tax cuts provided as part of the revenue neutral carbon tax is the ongoing low income climate action tax credit designed to help offset the carbon tax paid by low-income individuals and families. The credit is paid quarterly along with the federal GST credit and BC HST Credit.
The credit provides an annual maximum of $115.50 for each adult and $34.50 for each child ($115.50 for the first child in a single parent family). The maximum credit is reduced by 2 per cent of net income in excess of $31,711 for single individuals and $36,997 for families.
Fact: Government said it would return every dollar collected from the carbon tax to taxpayers through tax reductions. The tax reductions for individuals and families for the years 2009/10 to 2012/13 fiscal years consist of:
Revenue neutrality is intended to apply to the total carbon tax revenues collected rather than on a sector by sector or individual basis. If everyone was given back the exact amount of carbon tax they paid there would be no incentive to use less fuel and reduce emissions. Some individuals, businesses, or sectors will pay more than they receive through recycling measures and some will pay less, but the carbon tax as a whole is revenue neutral. All carbon tax revenue is returned to taxpayers through tax reductions.
Fact: The carbon tax, like the other B.C. fuel taxes on gasoline and diesel, is levied on a per volume basis and is not related to the selling price of the fuel. The government collects the same amount of carbon tax per litre at any price. For example, if someone bought 100 litres of gasoline after July 1, 2012 they would pay $6.67 in carbon tax when the tax is equivalent to $30 per tonne of CO2e. This is the case whether the gas costs 50 cents per litre or $2.00 per litre. In fact, to the extent that higher prices lead to lower consumption, the B.C. government will get less tax revenue.
Fact: The carbon tax is only applied to the purchase and use of fuels in B.C. Therefore, it is applied to gasoline or diesel used in a motor vehicle but does not apply to the vehicle itself.
Fact: All of the revenue from the carbon tax, whether from individuals, businesses, or local governments is returned to British Columbians through personal and business tax reductions.
Fact: The carbon tax is a tax on carbon dioxide equivalent (CO 2e) emissions generated from the burning of fuels in B.C. including gasoline, diesel, natural gas, fuel oil, propane and coal. It is not just a “gas tax.”
Fact: The historical volatility of gas prices, rising and then falling, has blunted the price signal for consumers and resulted in less conservation than required to meet government’s targets. The purpose of the carbon tax is to ensure that a consistent long term price signal is provided to consumers so that they continue to make the choices required to reduce their fuel use and emissions.
Fact: Business and individuals can choose to reduce their carbon tax by reducing usage, increasing efficiency, changing fuels, adopting new technology or any combination of these approaches. We can all begin to make the small changes towards a cleaner future that fit into our own individual circumstances, such as choosing energy efficient lights, lowering the temperature on the thermostat at night, or keeping our cars tuned-up.
Fact: The tax is based on the assumption that consumers respond to price signals. The purpose of the tax is to send a price signal to reduce the use of fuels and thereby emissions. Several studies show that consumers generally respond to higher gasoline prices by reducing consumption either by purchasing more fuel efficient vehicles or by driving less.
Fact: British Columbia remains committed to addressing climate change. However, four years in, the revenue-neutral B.C. Carbon Tax remains the only one of its kind in North America. As we implement the final scheduled rate increase, this is a good time to pause and examine how the carbon tax is affecting our economic competitiveness. We are beginning a comprehensive review that will cover all aspects of the carbon tax, including revenue neutrality, and will consider the impact on the competitiveness of B.C. businesses such as the agricultural sector, and in particular, B.C.’s food producers. The Province will be seeking written submissions over the summer on the revenue-neutral carbon tax to help inform the review. Submissions will be considered as part of the 2013 Budget process.