Revenue Neutral Carbon Tax Gives $ Back to Families while Supporting Lowest Tax Bracket-

The carbon tax is the key policy measure to meet BC's 2020 emission reduction target of reducing GHG emissions by 33% below 2007 levels.3 The tax covers all greenhouse gas emissions from fossil fuel combustion as well as emissions from combustion of other materials such as tires and peat for energy and heat generation, which together account for an estimated 77% of the Province's total emissions.4 In 2008, the initial tax rate was set at $10/tCO2e and it has since increased annually by $5/tCO2e per year to reach its final, now constant level of $30/tCO2e in July 2012. The carbon tax applies to fuels purchased or used in BC according to emission factors based on the specific carbon content of the different fuels (greenhouse gases other than carbon dioxide are included and weighted according to 100-year global warming potentials). All sectors and activities are treated the same.5

A key design feature of the BC carbon tax policy is revenue neutrality, i.e. the recycling of carbon tax income to BC residents by means of other tax reductions and lump-sum payments (British Columbia, 2012a). In fact to date, the BC government has not only ensured revenue neutrality, but implemented rebates and tax cuts slightly larger than the carbon tax. Each year from 2008 to 2012, the granted tax cuts and transfer payments exceeded carbon tax payments by roughly 10%. For example, in fiscal year 2011/12 total carbon revenue equalled $959 M but recycling measures amounted to $1,141 M. Table 1 provides an overview of recycling measures implemented in the fiscal year 2011/12 and forecast for 2015/16 (British Columbia Ministry of Finance, 2013).