B.C. Proposes Carbon Tax to Spur Emissions Reductions
By Amy McMahon, Staff Reporter
This story appears in the March 3 print edition of Transport Topics.
The British Columbia government is planning to impose a carbon tax on fossil fuels beginning on July 1, the most comprehensive tax of its kind in North America.
The tax is scheduled to apply to diesel, gasoline, natural gas, coal, propane and home-heating fuel. The diesel tax would be set initially at about 2.8 Canadian cents per liter, or about 10.5 Canadian cents per gallon, if the legislature endorses the proposal.
Under the proposal, the tax would rise each year, topping off at about 8.4 Canadian cents per liter of diesel in 2012, or about 31.75 Canadian cents per gallon.
Currently, the provincial tax rate on gasoline and diesel is 12 Canadian cents per liter, inside the metro Vancouver region. As of late last week, $1 was worth about 97 Canadian cents.
Last year, Quebec began collecting a carbon tax of less than 1 Canadian cent per liter from petroleum companies, but British Columbia’s proposal is much more comprehensive and would affect pump prices directly.
In announcing the tax late last month, British Columbia Finance Minister Carole Taylor said, “The principle is simple. Tax carbon-emitting fuels to discourage their use, and give the money back to people, back to businesses, so they have control. They can make their own choices about how the tax affects them.”
The plan — which is expected to receive formal approval by the legislature — would cut corporate, small business and personal income tax rates.
But Paul Landry, president of the British Columbia Trucking Association, said the tax would be particularly burdensome for truckers, whose shipping demands leave little flexibility to change driving behavior as the tax intends.
“[The] tax is so high on our industry, we’ll never recover it,” he said. “We don’t have the choices that the public does. We can’t put our freight on buses. We can’t transport pianos on public transit.”
If the tax is approved, “manufacturers, retailers and resource sectors will have to pay more for trucking transportation services,” Landry said.
He estimated, based on average miles driven, it would cost about C$1,000 per longhaul truck this year, C$3,000 in 2009 and C$6,000 by 2012. He estimated it could cost British Columbian carriers a total of C$270 million in 2012 alone.
“It’s not the case that none of it will be recovered. To be fair, some carriers, as the price of fuel rises, will be able to recapture this at one end of the continuum. At the other end, there will be carriers who will not be able to recover,” he said.
Landry also suggested the tax could cause shippers to divert some freight away from Canada’s Port of Vancouver to U.S. West Coast ports.
“B.C. ports compete with ports in Washington state; we compete with Seattle; we compete with Long Beach [Calif.]. If the cost of doing business is higher in B.C. because of these taxes, then it might just be one more . . . cost pressure that causes companies to do business elsewhere.”
The British Columbian ports of Vancouver and Prince Rupert handled an estimated 8% of West Coast container traffic, according to the Canadian government. That figure could grow as high as 15% by 2020.
While British Columbia’s Taylor said she believed the carbon tax would provide a national example for how to approach global warming, other provinces have said they are considering different approaches. Ontario said it will commit to shutting down its coal-fired generating plants as one option.
A carbon tax is “well-suited to B.C., its economy and the direction it’s pursuing,” Ontario Premier Dalton McGuinty said. “But we’re doing something differently here in Ontario that suits our economy and the direction that we’re pursuing.”
