by Rob Roper
Carbon Tax advocates invariably point to British Columbia as an example of a successfully implemented program. A big part of B.C.’s alleged success is the notion that it is “revenue neutral” – new tax cuts fully offset the costs of the Carbon Tax increase. Although revenue neutrality was the case when B.C.’s Carbon Tax was originally enacted… now not so much!
The Fraser Institute recently did a study of B.C.’s Carbon Tax and discovered that in 2013/14, the first full fiscal year in which the Carbon Tax reached its top rate of 30 per tonne, the tax was no longer neutral. The B.C. government was using some smoke and mirrors accounting gimmicks (applying existing tax credits that pre-dated the Carbon Tax to the offset calculations) to make the tax appear neutral. Without those gimmicks’ the Fraser Institute reports the Carbon Tax increase for 2013/14 was really…
$226 million that year. In 2013/14 and 2014/15, the two years for which final data are available, British Columbians bore a combined $377 million net tax increase.
If the available historical data are combined with the government’s projections to 2018/19, then from 2013/14 to 2018/19, the carbon tax is projected to result in a cumulative $865 million net tax increase for British Columbians… or $728 for a family of four.
We bring this up because the Vermont Carbon Tax proposal advocated for by VPIRG and Energy Independent Vermont (EIV) does not even begin as revenue neutral – it skims 10% off the top to fund pet projects. Nevertheless, the 90% of revenue collected that is supposed to be redistributed comes with the caveat that government can, of course, find other priorities for the money. If history guides us, they surely will.
- Rob Roper is president of the Ethan Allen Institute.