If BC drops the consumer carbon tax, what about incentives?
Earlier this month, BC NDP Leader David Eby made waves when he said he’d drop the consumer carbon tax if the federal government eliminated the legal requirement for one, but what would happen to the current incentives?
At the 2024 UBCM convention, reporters asked Eby several questions about the tax, the incentives, and the billions in revenue at stake.
“We will ensure that industry, the big polluters, continue to pay a carbon price to encourage them to decarbonize it,” he said.
Would the industrial revenue be enough to cover those incentives?
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Eby speaking to reporters at the UBCM convention. (Amir Ali/Daily Hive)
Earlier this month, Eby said that if the federal government changes policy, “we will remove the carbon tax for everyday British Columbians.”
We asked Nancy Olewiler, a professor at the School of Public Policy at Simon Fraser University with a PhD in economics, about how the BC NDP might still be able to offer incentives and benefits to British Columbians. Her research areas focus on climate policy, energy, regulation, and risk.
“The BC budget isn’t as helpful as it could be in that it provides total carbon tax revenue, not how it is broken down by who pays,” Olewiler said.
It doesn’t, for example, break down whether it’s industrial versus households and small businesses. Nor does it state how much is distributed annually through the Climate Action Tax Credit.
According to the BC Ministry of Finance, a single person can receive up to $447 per year and a family of four as much as $893.50 per year.
“The income ceiling for the credit will increase annually, with a goal to reach 80% of households in BC by 2030,” the ministry states.
“Total carbon tax revenue for 2023/24 is forecast to be $2.6 billion. In 2022/23, it was $2.1 billion,” Olewiler said.
She pointed out that the carbon tax increase this April was expected to bring in another $229 million in 2024 and 2025 and an additional $649 million in 2025 and 2026, according to budget documents from this spring.
Olewiler noted that we’d still have the industrial portion if we lost the consumer portion of the tax.
“If we knew the proportions of each, we could estimate the revenue loss. Say it is 50/50. If the federal carbon tax is eliminated starting late 2025, that would mean a loss of $1.4 billion to $1.7 billion, but that would be the gross amount.”
Olewiler said that the net amount “crucially” depends on the amount the BC government would stop spending on the Climate Action Tax Credit.
“Without the carbon tax paid by households, no need for the credit,” she said.
“Losing the credit more than offsets what would have been the incremental revenue gained from the increases in the tax rate each April 1.”
Olewiler thinks removing the tax credit would cover a “substantial component of the foregone ‘consumer’ carbon tax revenues.”
Electric-battery vehicle charger in a garage. (Shutterstock)
She also touched on the potential for the government to cut other programs or make something like the EV incentives “even more income-tested.”
“Incentives to industry would be unlikely to change as it would still be paying its share of the carbon tax.”
While we’d love to get direct answers from the BC government, it’s currently in “caretaker mode,” as Daily Hive has been informed that “All Government of BC communications are limited to critical health and public safety information.”
Would losing climate incentives in the form of “free” money impact you? Let us know in the comments.