Day: October 30, 2008

BC Carbon Tax regressive?

British Columbians with low incomes will benefit from the carbon tax in its first year, but will pay more by the scheme’s third year, a new study concludes.

The impact of the tax and its offsetting income tax cuts will become increasingly unequal unless the provincial government increases payments to low-income earners, the study says.

The study, by Marc Lee, senior economist with the Canadian Centre for Policy Alternatives, and Toby Sanger, senior economist with the Canadian Union of Public Employees, takes a detailed look at the fairness of the controversial tax.

via Carbon Tax Whacks the Poor, Later :: News ::

The report makes some good points. Revenue neutrality (the offsetting of carbon taxes with income/corporate tax cuts) has nothing to do with reducing carbon emissions. If I were to redesign this tax, I would do as the report says, increase rebates to lower income people, reduce corporate tax cuts so that the resulting revenue can be used to fund more transit infrastructure, energy efficiency infrastructure and the building of a low carbon economy.

A carbon tax in itself is not sufficient to reduce emissions. It does its part, but building an energy efficient, low carbon infrastructure will do a lot more and the money’s there, just use it.

You can read the whole report here.