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VANCOUVER -- Forget Ralphbucks: British Columbia is promising to rain down Greenbucks in its bid to sell a dramatic new, North America-first carbon tax that will grab more cash from the pockets of motorists and those heating their houses in the cold North while leaving big industrial emitters unscathed. (!?)*
"We promised you green and today we deliver green," B.C. Finance Minister Carole Taylor said as she stood on stage in Victoria Tuesday to deliver the province's budget in a striking pair of green heels.
"This is an important turning point for B.C., and we think for Canada because we are out in front on this," she said, suggesting the new tax could raise up a new "social movement" -- regardless of whether any other province follows suit, and despite serious concern from businesses cringing at the prospect of working under a patchwork of different climate regimes across the country.
And though the government's own estimates suggest the carbon tax will only trim B.C.'s emissions by 4.5% -- far shy of Premier Gordon Campbell's commitment of a 33% cut by 2020 -- Ms. Taylor was unapologetic.
"We don't want to wait," she said. "We think it's important to take the first step."
In January 2006, the Alberta government sent $400 cheques -- known variously as resource-rebate cheques, prosperity cheques or "Ralph bucks" -- to virtually every man, woman and child in the province. The rebate program cost $1.4 billion.
Ms. Taylor pledged to issue a $100 cheque to every person in the province in the weeks leading up to the July 1 launch of the carbon tax, which will begin at $10 per tonne of fossil fuel-fired greenhouse gas production. That amounts to 2.4 cents per litre of gasoline and 50 cents per gigajoule of natural gas, amounts that will triple over the next five years as the carbon tax grows to $30 a tonne.
By then, the owner of a gas-loving pickup truck who drives 40,000 kilometres a year will see a fat $500 added to his annual fuel bill.
Emissions from landfills and agriculture -- as well as from makers of oil, gas, aluminum and cement -- will not be taxed. Together, those emissions make up 30% of the province's carbon footprint -- although some may be covered in a cap-and-trade system expected to be unveiled late this summer.
In total, the tax is expected to raise $1.85-billion over the next three years, but Ms. Taylor stressed that none of that money will be used for new government spending. Instead, it will be returned to taxpayers in the form of credits to low-income people and new tax cuts that will, in 2008, drop personal income tax for those earning up to $70,000 by 2% and trim business taxes by a percentage point -- down to 11% for corporations and 3.5% for small businesses.
That makes it dramatically different from a carbon tax announced in Quebec, which will raise far less, but use the money to fund green research, rather than returning it to taxpayers. A B.C. government analysis suggests a dual-income family of four making $60,000 a year and driving 20,000 kilometres a year could actually see a $5 net benefit from the plan in 2009, the year when further tax cuts are also planned.
In effect, the carbon tax will transfer funds from businesses to individuals, who will face one-third of the burden but see two-thirds of the benefits.
The carbon tax legislation will also enforce a 10% salary deduction to any future finance minister who does not uphold the revenue neutral promise, and includes a healthy dose of government nannying, including helpful charts outlining the savings from lifestyle changes such as tuning up a car, weatherizing doors and windows and switching to a high-efficiency furnace.
On climate change more broadly, the B.C. government earmarked $1-billion for home energy audits, bio-diesel production, electrical connections at the ports and the purchase of fuel-sipping cars and energy-efficient appliances.
It also committed an enormous $2.9-billion in new health care money, and won plaudits from both business groups, who appreciated the revenue-neutral carbon tax and the chances it brings for fresh savings, and left-wing opinion groups.
A tax of "seven cents per litre, is not going to change anyone's behaviour. But I think the cumulative effect over time, when people are looking to buy a new vehicle, etc. -- that's where you're going to see the impact," said Marc Lee, a senior economist with the Canadian Centre for Policy Alternatives.
"I would have liked to see something a bit more ambitious but I have to say it's very well-crafted."
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