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British Columbia Provides Yet More Evidence that Revenue-Neutral Carbon Taxes Work

2 min. read

Recently, we wrote about a new study which found that a revenue-neutral carbon tax would actually boost the economy while slashing fossil fuel consumption and carbon emissions. Now, another article - British Columbia Enacted the Most Significant Carbon Tax in the Western Hemisphere. What Happened Next Is It Worked. - provides yet more evidence proving this point.

If the goal was to reduce global warming pollution, then the BC carbon tax totally works. Since its passage, gasoline use in British Columbia has plummeted, declining seven times as much as might be expected from an equivalent rise in the market price of gas, according to a recent study by two researchers at the University of Ottawa. That's apparently because the tax hasn't just had an economic effect: It has also helped change the culture of energy use in BC...

It also saved many of them a lot of money. Sure, the tax may cost you if you drive your car a great deal, or if you have high home gas heating costs. But it also gives you the opportunity to save a lot of money if you change your habits, for instance by driving less or buying a more fuel-efficient vehicle. That's because the tax is designed to be "revenue neutral"—the money it raises goes right back to citizens in the form of tax breaks. Overall, the tax has brought in some $5 billion in revenue so far, and more than $3 billion has then been returned in the form of business tax cuts, along with over $1 billion in personal tax breaks, and nearly $1 billion in low-income tax credits (to protect those for whom rising fuel costs could mean the greatest economic hardship). According to the BC Ministry of Finance, for individuals who earn up to $122,000, income tax rates in the province are now Canada's lowest.

So what's the downside? Well, there really isn't one...

Did you catch that last line? That's right, there really isn't any downside to a revenue-neutral carbon tax. Unless, of course, you insist on continuing to guzzle fossil fuels for whatever strange reason, even though it makes no rational sense to do so. In contrast, if you choose to act rationally and make energy efficiency upgrades and/or switch to clean energy, you stand to benefit a great deal from a revenue-neutral carbon tax. Since, of course, non-carbon-based energy would cost a lot less, relatively speaking, compared to carbon-based energy. And that's exactly the way it should be, given the negative "externalities" - pollution, harm to people's health, etc. - that fossil fuels entail.

Topics: Clean Economy