On the BC Budget: the Carbon Tax
February 20, 2008 · By Shane Edwards
It was promised, it is delivered. (Gads. I sound like a Stephen Harper commercial.)
The big leadoff is the carbon tax proposed. It affects a number of different sectors, but the one that hits home the hardest is the gas tax component. 2.4 cents to start, rising to 7.2 cents in 2012! All I can say is ack. This hurts everyone. Absolutely everyone. Yes, even transit riders. They’ll increase transit fares for the increased cost of gas. Yes, even bicycle riders. The price of commodities (safety gear, the bikes themselves) will increase because of shipping costs rising. But for me, with a wife and kids at home, I think it sucks because it is a blanket over everything without exception.
Wonder Woman’s Mikey made this point a few months ago: when you have a family, driving a Prius or a Smart car is not an option. Your family vehicle becomes a mass transportation vehicle. It becomes a bus. If the big beastly gas-guzzlers like crew cab trucks and grand caravans or even regular vans are needed for capacity, why should their fuel efficiency and carbon footprint not be measured per passenger instead of per vehicle? But that it too nuanced for this government. Instead, they will just make life more miserable for every family in the province.
And don’t even waste my time bringing up “it was your choice to have kids”. My kids are going to pay for your pension, your health care, and your economy when you are decrepit. If you don’t think it makes sense to ease the burden on families so we can invest in our kids and make them as highly educated and productive as possible, then you will reap that whirlwind upon retirement. Enjoy your single life while you can.
But while we’re on this “green initiative”, I have to talk about another asinine area of this budget. I quote:
In June, every B.C.er will get a one-off $100 climate action dividend, for green purchases, amounting to some $400 million over the next three years.
Low-income families will get a climate action credit of $100 per adult and $30 per child, to be paid out quarterly.
I first noticed this “cash back” approach to governance 20 years ago in Alberta under Ralph Klein. He started coming up with “rebates” and junk like that to literally cut Albertans a cheque of “free money” around election times. When I got to BC, I would find that conveniently, right around elections, formerly money-losing utilities like BC Hydro, or the public insurance company ICBC would suddenly report a “profit” and like magic, issue all British Columbians cheques too! I had hoped that the BC Liberals would not stoop so low, but here we are - cutting cheques in the name of “climate action”. What are we supposed to do with this money? No use is stipulated. It could go anywhere, and will go everywhere. What does this money giveaway have to do with “climate action”? Give us an extra hundred bucks to party on a summer weekend and enjoy the “climate”?
But lastly, I have one more hate for this budget. This completely falsifiable claim, that governments have been using in Canada from time out-of-mind to introduce new taxes to us, relying on Canadians’ ignorance of our own laws and our saturation of American content in TV and media to fool us into thinking our governments work under the same rules.
The tax, which will raise $1.8-billion by 2011, will be revenue-neutral. The higher taxes will be offset by tax cuts to individuals and business.
See, in the USA, they actually have to take tax increases to the polls. People have to vote on tax increases. Plus, when they say a tax is for “this purpose” it is written into the actual proposal for the tax, and the government cannot legally use that revenue for any other purpose. In Canada, they don’t. Some taxes and levies can be imposed without even a vote in legislature. But worst of all, no matter what Carole Taylor says, these “environmental taxes” go straight into general revenue. She can claim that it is “revenue neutral” and will be offset by tax cuts, but she is not legally obligated to do that, and has the entirety of government structure, revenue and expenses, to hide this. It is simply a lie to make us think that a new tax is ok.
That is what I think of the Environmental taxes offered in this budget. The pathetic thing is, if this tripe is what the BC Liberals serve up, I know that whatever the NDP would offer if they were in power would be exponentially worse. So I guess I have to like being beaten with a billy club, if the choice was either that or having my eyes gouged out and my fingernails removed.
Yup, any tax is a bad tax. The ones who pay are the families, the backbone of our society. Carbon tax? They might as well have just raised the PST.
Thank you…
I am po.ed because the so called global warming isn’t hapenning and frankly this is just another tax grab only Because the B.C pst will be going down were not getting a tax break. fankly though there really isn’t another party to vote for in B.C I will never vote NDp I might try the B.C Conservative party though.
Maybe someone should ask the Campbell government where the “environmental levy” that has been charged ($5.00 per vehicle battery and $3.00 per tire)and that they have been collecting for a number of years is going. When I complete the PST return every month, there is no special place to put that amount, it is all lumped into general revenue.
Gordon Campbell has gone “green” alright - the colour of more of our money out of pocket!
Shane,
I agree with much of your post, but I have to disagree on your first two points. The gasoline tax is not going to hurt anyone but those selling gasoline. All this talk of gas taxes being passed on down to the consumer is a load of ****.
Gas prices are advertised with all taxes included. This means that gas stations will charge whatever price the market will bear given the current supply and demand. Since supply is relatively static (refineries are operating near capacity, no new ones built in years), and demand constantly goes up, the price goes up.
The price of gas this morning was north of $1.11. This means that your average consumer today is willing to pay $1.11/L, and the gas stations will still sell most of their supply before the next gasoline delivery.
Let’s try a hypothetical scenario: all taxes on gasoline will be eliminated tomorrow. The price of gas will immediately fall to, let’s say, $0.80/L. Demand for gasoline surges (more road trips, SUVs, less public transit, etc). Gas stations start to run out of gas, so they raise the price to maximize their profit. Why sell out of something for $0.80 when you can sell out for $1.10? Before you know it, the price is right where supply & demand dictate. There has been no change except a transfer of revenue from the government to the gasoline companies.
The opposite scenario is left as an exercise to the reader. Again, no difference in the final price of gas, but a transfer of revenue from the gasoline companies to the government.
As for the tax incentives for high-capacity vehicles for large families - this makes theoretical sense, for the cases when the large vehicle is actually being used to transport large numbers of people. Practically, this would be 1000x more invasive and bureaucratic than the gun registry.
Fuel-efficient SUVs and minivans are not only possible, they are actually coming on to the market. These should be eligible for tax incentives. If you choose to drive a gas guzzler, you won’t get any rebates, no matter how large your family.
Behave Hunter
The taxes I pay go to the armed services, education and health care. I don’t think that is a bad use of taxes and as such the taxes raised cannot be bad either. I need those things so I must face up to the bill for them at the end of the day.
Hmm, a carbon tax in a sparsely populated country whose global greenhouse emissions are almost statistically insignificant. Plus, questionable science to boot.
Doesn’t sound like a lot of thought went into this…
Lets assume, for a moment, that global warming is not an issue (I reserve judgement on that) - a consumption tax is a policy instrument used to reduce excessive demand for a scarce product by encouraging three things: improving efficiency of its use (i.e. cars that burn less fuel) and reducing use (driving less where possible) and encouraging the development of alternative products (biofuels). As demand for the scarce product goes down from any or all of the three behaviors, then so will the price of the scarce comodity in question. In the long run, if this tax works, gas prices will be cheaper AND we will be using less. Seems like a win win for the environment (reduced air polution and a reduction in the impact of refining oil), our pocket books, and the advancement of technology.
Now, this plan also leaves a few choices up to the consumer. Use the extra cash to pay for the increase in taxes on fuel, or to invest in a car that uses less (and therefore, you end up spending less over the long run).
Just throwing that out there.
Give us an extra hundred bucks to party on a summer weekend and enjoy the “climate”?
Don’t forget to bring the beer and popcorn.
I think the BillyJack has it right up above.
“As demand for the scarce product goes down from any or all of the three behaviors,”
Yeah, but according to the Butchered School of Economics, it makes no difference.
This one is bizarre, from the Opening Post:
“If the big beastly gas-guzzlers like crew cab trucks and grand caravans or even regular vans are needed for capacity, why should their fuel efficiency and carbon footprint not be measured per passenger instead of per vehicle?”
Answer: simply because the number of passengers who spew out the same amount of emissions in the environment is irrelevant to the damage created to the environment. That should be obvious.
“I think it sucks because it is a blanket over everything without exception.”
If you are looking for a policy prescription that reduces gasoline emissions, it should be a blanket over everything. The underlying assumption of environmental damage (I too will reserve judgement over the connection between emissions and environmental effects for the moment) is blind to who emits. Once the emission is in the air, its effect does not depend on whether you have a thousand people in your car or whether you have only one.
Now for the economically-ignorant nonsense:
“The gasoline tax is not going to hurt anyone but those selling gasoline.”
Riiiiiiiight. In that case, when the prices rise, it makes no difference to the consumer. The consumer pays the higher prices out of a magical economic slush fund as opposed to his own wallet. Riiiight: it does not hurt the consumer.
“This means that your average consumer today is willing to pay $1.11/L,”
It also means that the “average consumer” is calculated today from fewer consumers who can afford the higher price compared to when the price was lower. Nevertheless, let us continue with this apples-oranges economic analysis….
“Let’s try a hypothetical scenario: all taxes on gasoline will be eliminated tomorrow. The price of gas will immediately fall to, let’s say, $0.80/L. Demand for gasoline surges (more road trips, SUVs, less public transit, etc).”
Correct. Demand rises. There is more consumption. In other words, there is more enjoyment of the product in question. People are better off (environmental damage aside) than before when the price was higher. People are enjoying something more than before.
Therefore, when the price goes down, consumers are better off as evidenced by their choices to consume more. When prices go up, consumers are worse off as evidenced by their choices to consume less.
“There has been no change except a transfer of revenue from the government to the gasoline companies.”
No change??????? So…. consuming less is no different from consuming more… Right: no change. Sorry, but you continue to butcher economics. Saying it makes no difference to consumers is the height of stupidity or you are genuinely disingenuous — take your pick.
“Answer: simply because the number of passengers who spew out the same amount of emissions in the environment is irrelevant to the damage created to the environment. That should be obvious.”
Charles: Duh. Yes. But you’re not getting the reality that if a vehicle is transporting large numbers of people, the carbon footprint per person is lower. Why do you not get that if a given family of say 6, drove 3 Priuses, the net environmental damage would be greater than if they drove one Grand Caravan? It is the bus principle. How can it be bad for the environment for a private citizen to operate his own bus, but okay for him to take a publicly funded one? The publicly funded one puts out a WHOLE LOT more emissions than a minivan (per vehicle, by your reasoning.)
That economic reasoning you complained about after, I agree with. Abbatoir’s analysis leaves a lot to be desired.
Shane,
The carbon footprint per person is irrelevant.
According to you, places like India and China that have billions of people, should do nothing about the emissions they spew out either, right? Is that your defense?
What?
You are going to have to work pretty hard to explain to me how my view of carbon footprints equates to believing in no controls in India and China.
My position does not condone the Kyoto Protocol in any regard, which is a document signed into law by the Liberals, specifically exempting India and China from any controls on emissions.
I fully agree with developing cleaner energy and cleaner automobiles. I even agree that long-term, even families should switch to more fuel-efficient options when they are available. But slapping them with a whopping expense with an increased gas tax when there have been as yet next to no options for them to switch to in terms of a “green” vehicle is unacceptable.
Yes, there are a couple of hybrid SUV’s out there, but I’ll bet you have never tried putting 3 child restraints in the back seat of a Ford Escape. Otherwise you wouldn’t be waasting your time typing out objections like this.
Oh, and the way to get me to switch to a hybrid is to:
1. Offer me a vehicle which will actually accomodate my family’s needs in terms of transportation, but yet be “green”.
2. Offer me a favorable trade-in or significant incentive to switch.
Jacking up the gas price when I have no choice in which care I drive doesn’t help me conserve. It only rapes my pocketbook and takes money out of other aspects of my family’s budget. I don’t have a choice about which vehicle I drive right now. Give me a choice and then I might accept that excuse for raising gas prices.
Actually, no, Shane. I will not have to work pretty hard. It is very simple arithmetic.
The more people you have with the same emissions means less a lower per person carbon footprint. Therefore, according to you, they should do less. That makes no sense and it does not help the environment.
I think you have to work hard to explain why a per person criteria is worthy of consideration when it comes to protecting the environment.
Charles:
I have to admit that I do not understand your argument at all. Transporting six people in one vehicle does less damage to the environment than those six people travelling individually, or in pairs, or threes. Yes, the emissions from the van with six people in it will cause damage to the environment, but the magnitude is less than the other scenarios. Therefore, an individual carbon footprint is worthy of consideration - its actually quite a simple efficiency argument. If people living in cities all opted to take public transportation the consumption of fuel would be lower, and emissions would be lower, thus reducing the impact of the city’s transportation on the environment. Add to that a whole host of other environmental benefits (e.g. diminished need for larger roadways, etc.)
India and China’s large populations and rising wealth poses a difficult environmental problem. I know that I would prefer that they not adopt our “single person per car” approach to commuting. Wouldn’t you agree?
See, now isn’t this better than calling each other sodomites and fuck-tards?
Yes! I’ll give you that one.
For the record, I never used either of those expletives myself. Good thing…
Ryan,
I am looking at the only thing that matters to the environment: total emissions.
A per person calculation is irrelevant.
This is incredible.
All of the people in British Columbia currently emit X into the atmosphere. The effect on the environment is irrelevant whether there is 1 person living in B.C. or whether there is 1 billion people. Therefore, a per person calculation hides the effect it has on the environment.
If your policy goal is to decrease emissions and help the environment, you have to increase the cost of emitting the pollutants.
Maybe this analogy will help:
If you are a fish in a lake, do you really care whether 1 person dumped a ton of crap in the water or whether 2 people each dumped half-of-a-ton of crap??????? The per person calculation is different for each scenario but the effect on the environment is the same!
—–
I hate statistics. They are nothing but tools to deceive and mislead the public.
“If you torture the data long enough, it will confess.” - Ronald Coase
Charles,
I’m afraid I just don’t understand your reasoning here.
“Riiiiiiiight. In that case, when the prices rise, it makes no difference to the consumer. The consumer pays the higher prices out of a magical economic slush fund as opposed to his own wallet. Riiiight: it does not hurt the consumer.”
I’m afraid I don’t understand why you assume that the taxes would just be passed on to the consumer. The price is advertised with taxes included. The gasoline suppliers are interested in selling the maximum amount of gasoline, at a maximum price. If they try to pass on the tax increase to the consumer, demand goes down. Their price goes down in response to encourage consumption. This is how a free market works.
If you have a more substantive response than ‘Riiiight’ I’d be more than happy to hear it. We have seen that there is no benefit to the consumer when consumption taxes are decreased, in the cases where the advertised price includes taxes. The GST has been cut by 2%, yet I have seen no drop in the price of gas, movie tickets, newspapers, parking rates, etc. The retailers simply assumed the extra profit, because the consumers were already paying the previous price.
“If you have a more substantive response than ‘Riiiight’ I’d be more than happy to hear it.”
I do: go take a high school course in basic economics. The more you comment on any economic matter, the more you publish to the entire world you ignorance. Keep digging.
Abattoir,
For what it is worth — I am going to take a chance that you have the ability to learn or understand economics — when you observe the GST cut and the retailers keep the same ticket prices, your before and after comparison is invalid. You are not keeping to the ceteris paribus condition in your naive analysis. You are observing a tax increase AND a simultaneous retail price increase. As such, you can not draw any conclusion of the effect of a historical tax policy based on statistics alone.
Hell, for all you know, the world price of energy (or the price of water or insurance costs or whatever) could have simultaneously changed when your data was collected too.
“Maybe this analogy will help:
If you are a fish in a lake, do you really care whether 1 person dumped a ton of crap in the water or whether 2 people each dumped half-of-a-ton of crap??????? The per person calculation is different for each scenario but the effect on the environment is the same!”
No, the analogy does not help because I do not think it is accurate - it does not seem that the two people in your example can combine their crap so that it is two people dumping half a ton of crap into the pond, which I am sure even fish would agree is better. Let’s try this one:
Five people on my street each drive to work seperately. One day we decided that this did not make much sense - we happen to work very close to each other and work the same hours. Independently, we (and I am making up figures here, like you crap analogy) emit 10 tonnes per year of carbon into the environment. Angus, who owns a van that can accommodate 6 people, has agreed to do the driving - thanks Angus! Now, when we go to work, we are emitting slightly more than 10 tonnes per year (due to the increased mass of having more passengers in the van). Yes, we are dumping a little more than 10 tonnes of carbon into the atmosphere, but we all agree it is much better than 60 tonnes. Therefore, the carbon footprint of our daily commute to work has been decreased dramatically.
On the subject of carbon taxes, I gotta say I don’t like it at all. Great revenue generator for governments but will probably have a negligible impact on actual carbon emissions. I have a feeling that once we charge people for these emissions, we will be creating a buyer/seller carbon relationship. People may feel entitled to emit carbon because they paid for it. I think, in the end, quality of life considerations (clean air in communities, less traffic, etc.) are (or at least should be) a more powerful motive for decreasing carbon emissions.
Charles,
Yes, I do have the ability to learn and understand economics. I even gave you an honest opportunity to try to defend your assertions. Instead you attack my intelligence. “You don’t know what you’re talking about” - not really a great argument.
Retailers are going to seek to maximize profits, which means maximizing the area under the price/demand curve. Under normal market conditions, this means selling the maximum amount of product for the highest price. Since supply is fairly static, demand dictates price.
Since we last debated economic policy, Charles, I have taken the opportunity to ask those with more formal economics education than me (all university educated in economics and/or statistics). I’m afraid I’m a little more informed than you’d care to believe, Charles.
Ryan,
I presume you recognize that in Your analogy you are changing more than one variable. You are presenting a new analogy that is six as opposed to half of a dozen. You are comparing a situation where the total emissions have changed from 60 tonnes to 10 tonnes. That is actually what I am getting at.
The only thing that matters is total emissions. The fact that you have 6 people or 7 people or 8 people in Angus’ van is irrelevant to the effect on the environment. However, according to Shane and his Opening Post, he would suggest that it would be different because the “per person” calculations (10t/6p or 10t/7p or 10t/8p) are different.
Like you, I oppose carbon emissions because I believe it is both a tax grab and cronyism. In Canada, reducing emissions will have a negligible effect on the world anyway.
The Butchered School of Ignoramonomics may have trouble accepting this one but I do not think we should do anything except let the market price for oil naturally rise. The decrease in demand will occur anyway with rising prices whether we have added taxes or not.
So much for the respite in name-calling.
Incidentally, I agree with Charles that rising prices will naturally reduce demand for gasoline. Increasing consumption taxes on gasoline will do very little or nothing to reduce demand directly. If we choose to direct tax money at infrastructure and public transit developments, only then could it have any real effect.
So much for being able to learn economics.
Incidentally, Abattoir believes that rising prices will naturally reduce demand for gasoline but adding taxes to gasoline prices will do nothing to reduce demand. Figure that one out!
Anyone can walk on water when it is frozen, CA, even economists.
Charles, I’m basing my conclusions on the assumption that supply is effectively limited. Using a supply-demand curve analysis, this is represented by the supply line going vertical beyond a particular production quantity. This means that no matter what the price is, the supplier cannot supply more product.
The demand curve intersects the supply curve in this vertical section. This is based on the same assumption that we have very little or no excess gasoline production capacity. Since the effect of a consumption tax is to raise the supply curve, we are simply moving a vertical line upwards. The intersection of the two curves (dictating price and consumption) therefore does not move.
Beyond a certain point, yes, excessive consumption tax will begin to affect supply, as the supply curve is moved beyond the vertical region. However, removing taxes will therefore have no such effect on either price or consumption when the curves are intersecting in this region.
If you disagree with my base assumption, that’s a valid point, and I would welcome debate on that topic. Given the assumption, however, the analysis is valid.
Oh, and I realize this is a simplified model; supply is not absolutely limited. Additional supplies can be brought in from other areas, at a much higher cost of course. This has the effect of moving the supply curve away from the purely vertical. Since little excess refining capacity exists globally, it would retain quite a steep slope.
This means that reducing taxes would indeed have a small effect on the final price of gasoline, however the vast majority of the benefit would simply go to the petroleum companies.
Smarter Than Ezra,
I will give you that. I see what you are getting at. Touché.
However, at least we (minus one person) can agree that a tax will raise the price paid by consumers and reduce the amount consumed otherwise. That is what the environment needs: reduced gasoline consumption. It really does not matter whether it is because single-user vehicles drive less or people start car-pooling or whether people buy more efficient cars or whether it is from a tax or from good old fashioned scarcity. In the end, for the sake of the environment, the amount consumed is less than before.
My biggest beef is with Shane’s “per person” criteria in that it can be misused to promote a policy that does not help the environment. It can hide any decrease in total gasoline consumption.
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