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Updated: Thu, 15 Nov 2012 12:30:02 GMT | By Doug Ward

B.C.'s carbon tax is here to stay

North America's only emissions tax survives a challenge on its own merits.

 (© Photo: Jonathan Hayward/CP)

(Photo: Jonathan Hayward/CP)

When the B.C. Liberals considered a resolution calling for an end to the province's pioneering carbon tax in October, former party president Andrew Wilkinson was quick to remind the ruling party's convention that terminating the contentious levy would create a fiscal disaster just before next spring's provincial election. Killing the tax now would 'upset the apple cart,' he said, forcing the Premier Christy Clark to raise corporate and personal income taxes to make up for the loss of $1.2 billion generated by the tax this fiscal year.

In the end, the delegates voted overwhelmingly to keep North America's first and still only broadly based, revenue-neutral carbon tax, which has helped B.C. maintain the lowest average income tax rates in Canada. The vote suggests that former premier Gordon Campbell's green policy experiment still has political legs despite the unwillingness of other jurisdictions in North America to adopt similar measures. (Indeed, the federal Conservatives have taunted the NDP opposition for its purported plan for a national carbon levy.)

The Clark government's finance ministry is in the midst of a previously announced review of the carbon tax, but few now believe it will be scrapped or seriously altered. 'The most likely option for the government review is essentially the status quo,' says Jock Finlayson, vice-president of the Business Council of B.C. His organization itself is urging the government to cap the tax at the current $30 per tonne and consider reducing it for energy-intensive industries within the province, which, it argues, have been placed at a competitive disadvantage. But the council is pleased with the $721 million in corporate tax reductions stemming from the revenue shift. Bringing in new taxes to make up for the loss of carbon tax revenue would be 'quite messy,' Finlayson says.

Evidence mounts, meanwhile, that the tax really is delivering environmental benefits. 'It is good policy to tax something we don't want, carbon, rather than taxing something that we want, which is income and success,' says Environment Minister Terry Lake. He notes that B.C.'s greenhouse-gas emissions fell by 4.5% between 2007 and 2010, while the province's economic growth outpaced Canada's as a whole. An Ottawa-based think-tank, Sustainable Prosperity, recently found that British Columbians' use of petroleum fuels has dropped by 15.1% since 2008. Over the same period, the rest of Canada increased its per-capita consumption by 1.3%.

The poll-topping NDP opposition, too, has embraced the tax it once campaigned to axe. 'The carbon tax is here to stay, and we believe the emphasis should be on making it better,' says NDP environment critic Rob Fleming. One of those tweaks would involve redirecting some of the current corporate tax reductions to green initiatives such as transit should the party win next May's election, which worries the business community.

Among the general public, however, the carbon tax is more popular now than it was four years ago when critics were stoking fear of the unknown, says University of B.C. political scientist Kathryn Harrison. 'It's actually doing what it's supposed to do. So why fix it?'

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