Carbon tax review
After a review last year, B.C. confirmed it will keep its revenue-neutral carbon tax, the current carbon tax rates and tax base will be maintained, and revenues will continue to be returned through tax reductions.
The review covered all aspects of the carbon tax, including revenue neutrality, and considered the impact on the competitiveness of B.C. businesses such as those in the agriculture sector, and in particular, B.C.ís food producers.
More information on the review outcomes can be found in the Carbon Tax Review Topic Box in the Budget 2013 - June Update.
B.C. continues to be a leader in climate action by having a carbon tax that puts a price on emissions to encourage individuals, businesses and others to use less fossil fuel and reduce emissions. As other jurisdictions, especially within North America, introduce similar carbon taxes or carbon pricing, government may again review and consider changes to the carbon tax.
Overview of the revenue-neutral carbon tax
The revenue-neutral carbon tax was implemented on July 1, 2008, and the final scheduled increase took effect on July 1, 2012.
The tax puts a price on carbon to
- encourage individuals, businesses, industry and others to use less fossil fuel and reduce their greenhouse gas emissions;
- send a consistent price signal;
- ensure those who produce emissions pay for them; and
- make clean energy alternatives more attractive.
The initial tax rate was relatively low and has increased gradually to allow families and businesses time to reduce their emissions. The tax is also intentionally broadly based and paid by all those who consume fossil fuels in the province.
The carbon tax is revenue neutral, meaning every dollar generated by the tax is returned to British Columbians through reductions in other taxes. Tax cut measures include income tax credits for low income individuals, cutting the first two personal income tax rates by 5 per cent, providing northern and rural homeowners a benefit of up to $200 annually, and reducing the business taxes.
The Minister of Finance is required by law to annually prepare a three-year plan for recycling carbon tax revenues through tax reductions. This plan is presented to the Legislative Assembly at the same time as the provincial Budget. The Revenue Neutral Carbon Tax Plan and Report presented in Budget 2013 - June Update shows the tax reductions that return carbon tax revenues to individuals and businesses.