Wednesday, July 24, 2013

A Carbon Tax: The Intelligent Way to Limit Greenhouse Gas Emissions

Sixteen years ago, I predicted the failure of the Kyoto agreement as a means to prevent atmospheric accumulation of greenhouse gases, and advocated a revenue-neutral carbon tax  combined with a countervailing duty on imports from countries without a carbon tax.

A revenue-neutral carbon tax  was subsequently made an explicit principle of fiscal management by the Canadian Green Party under the slogan: tax what we don't want, e.g., pollution, don't tax what we do want, e.g., income.

A few years later, the Green Party policy was implemented by a Liberal government in my home province of British Columbia, which became the first political jurisdiction in the world to impose a revenue-neutral carbon tax.

The outcome was precisely as anticipated, not only as reported by the Province of British Columbia, but as concluded in a recent report by the independent Ottawa-based think tank, Sustainable Prosperity, which states, in summary:
The evidence from the past four years shows that BC sales of fuels subject to the tax have been dropping – in fact, the average British Columbian’s consumption of them has dropped 15.1% since 2008, while the rest of Canada’s per capita sales have increased by 1.3%. Over the same period, economic growth per capita has been consistent with growth in the rest of Canada. So far, the tax seems to have had a positive environmental impact without harming the economy.
Encouragingly, business leaders across Canada, including the Council of Canadian Chief Executives, have endorsed a national carbon pricing scheme, hoping, so the Globe and Mail reports, to avoid a balkanized system of climate regulation across Canada.

Such simplicity, is naturally anathema to politicians who know full well that imposing a national carbon tax will antagonize some among  the most powerful Canadian and international financial and industrial interests. It is unlikely, therefore, that we will see implementation of a cross-Canada carbon tax in the immediate future.

It is, nevertheless, encouraging that the leadership of the business community is thinking both clearly and responsibly about how we can most cheaply and effectively reverse the current anthropogenic transformation in the chemical composition of our atmosphere. Surely the political class will be unable to hold out indefinitely against not only the interest of humanity but of all enlightened business thinking.

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