BC Is Increasing Its Carbon Tax!

What a difference an election can make. On September 11, the British Columbia New Democratic Party (NDP) released its four-year budget, revealing that it will increase the province’s carbon tax by $5 per metric ton each year, reaching $50 per metric ton in April 2021. Hallelujah! This exciting change in BC climate policy is thanks in part to the small but mighty BC Green Party, which helped bring the NDP to power after this year’s election.

The announced price increase is clearly a compromise between the NDP, which only intended to comply with the Trudeau administration’s federal requirement that the price increase to $40 per metric ton by the end of 2021, and the Green Party, which campaigned on the promise to increase the carbon tax by $10 per metric ton, reaching $70 per metric ton in 2021. During the 2017 campaign, the reigning BC Liberal party, which had been in charge of BC’s government since 2001, swore it would keep the carbon tax rate frozen.

BC Liberals weren’t always the laggards on climate policy. In fact, it was thanks to Liberal Premier Gordon Campbell’s leadership that BC started charging polluters back in 2008. The tax started at $10 per metric ton and increased $5 per year until it reached $30 per metric ton in 2012, at which point it plateaued for five years. BC leaders always expected the carbon tax to march steadily upward to keep the province’s pollution heading downward, but politics intervened. Now at last, it is back on track.

Original Sightline Institute graphic, available under our free use policy.

Unfortunately, the NDP/Green Party compromise doesn’t put BC completely on track to meet its goals. Two years ago, the Climate Leadership Team—a group of 16 leaders from BC businesses, First Nations, local governments, academia, and the environmental sector—warned that the province was not on track to meet its legislated greenhouse gas (GHG) emission reduction goals of reducing pollution to 80 percent below 2007 levels by 2050. The Climate Leadership Team recommended that BC increase the carbon tax by $10 per metric ton each year beginning in 2018, the same as the Green Party’s position. Nonetheless, increasing the tax by $5 per metric ton each year is progress.

The tax increase alone is big news, but there’s more. The NDP also announced it will change the previously strict revenue-neutrality requirement, freeing British Columbia to spend carbon tax revenue on green investments. Up until now, the carbon tax has been what’s known as a “revenue neutral tax shift,” meaning any money the tax brings in must immediately go back out to taxpayers in the form of tax breaks or credits. The NDP removed that requirement, meaning BC can now use the revenue to invest in clean energy. The tax increase will raise an estimated new $200 to $400 million per year. BC will spend $40 million to increase tax credits to low and modest income British Columbians. NDP Finance Minister Carole James announced her government will also use new carbon revenue to help families pay for green initiatives such as home retrofits or low carbon transportation.

More revenue, less pollution, more help for struggling families, and more investments in clean energy—British Columbia is headed in the right direction.