Lower Taxes, Less Smog: The Carbon Tax’s Wild Success in British Columbia

Want to lower taxes? Reduce pollution? Promote savings and investment, rather than borrowing and spending?

Photo: ##http://www.temple.edu/borguet/TEE/TEE_Main.html## Temple.edu##

Well, perhaps the US could take a page from British Columbia. This Canadian province recently upped the pricetag on its wildly successful carbon tax. And, boy, is it paying off.

This $30 (up from $25) per ton tax on pollution has helped BC lower its corporate income taxes from 12 to 10 percent. And there was enough left over to lower income taxes on those making less than $119,000. To top it off, the program has reduced greenhouse gas pollution 4.5 percent in four years, even as the population has grown.

That’s according to economist Yoram Bauman and professor Shi-Ling Hsu in a recent op-ed for the New York Times. According to these scholars, this is a much more enlightened way to issue taxes:

Substituting a carbon tax for some of our current taxes — on payroll, on investment, on businesses and on workers — is a no-brainer. Why tax good things when you can tax bad things, like emissions?

Bauman and Hsu say it’s time for the US to get on board with carbon taxes. A BC-style carbon tax in the US would create $145 billion worth of revenue annually, Bauman and Hsu report. That money could be used to used to reduce individual and corporate income taxes by 10 percent. After that there would be enough left over to reduce estate taxes (to please those on the right) and payroll taxes (for those on the left).

Sound far-fetched? Well, if you recall the United States flirted with the idea of cap-and-trade, a different emissions pricing scheme, in the 2009 Climate Bill. Maybe someday, when Congress tires of jabbing each other with sharp objects, they might be well served to consider the British Columbia approach.

  • Anonymous
  • As knowing many who live in the Province within the Vancouver metro area however, the cost of living continues to rise drastically to where many are planning on taking refuge in Alberta.

  • Thanks for blogging about our Carbon Tax in BC! One important way for us to keep it strong and effective is to have others follow along. There are worries that if we remain the only one with a carbon tax, and we increase it (to where it can really be effective at transitioning our economy to a lower-carbon, more energy efficient state), we will fail to be competitive. 

  • Daniel Hodun – you’ll notice that this article points out that the carbon tax does nothing to make BC a more expensive place to live.  All the extra money raised by the carbon tax is spent as tax cuts.  Thus, if you have fewer CO2 emissions than the average person, you are likely to have more money in your pocket as a result.  (Of course, because of the way income tax cuts work, rich people will see much more of these benefits than poor people.)

    What you really need to cut cost of living is some way for housing to be more affordable, which is separate from taxes.

  • Anonymous

    tinyurl.com/cyk9xz2

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