Written by Tom Fletcher
Feb 20, 2008 at 01:51 AM
The B.C. government will collect an estimated $1.8 billion over the next three years from a new “carbon tax” on all fossil fuels, but Finance Minister Carole Taylor vows it will all be given back to individuals and businesses.

The carbon tax is to take effect July 1, adding an estimated 2.4 cents to a litre of gasoline this year and rising to 7.2 cents by 2012. It will also apply to natural gas, starting at 49.88 cents per gigajoule, and diesel fuel starting at 2.8 cents a litre. Taylor said legislation will be tabled this spring requiring the government to return every dollar collected by the carbon tax. As the carbon tax is phased in over four years, income tax on the first $70,000 of earnings is to be cut two per cent in 2008 and five per cent in 2009.

Lower income people will also receive a “climate action tax credit,” amounting to $100 per year for each adult and $30 for each child. A single person earning $30,000 or less, or a couple earning $35,000 or less, will qualify for the full amount, to be paid quarterly with the GST tax credit starting in June.

Taylor said the tax cuts and credits will “give dollars to individuals to make their own lifestyle choices,” and those who choose fuel efficiency will come out ahead. An average family with a minivan would pay $46 a year in carbon tax, which could be saved by driving 10 km less each week, or weatherstripping doors and windows to cut heat loss, she said.

NDP finance critic Bruce Ralston said the budget exempts major industries from the carbon tax, at least until a carbon trading system comes into place. He also noted that the biggest business tax cut is for financial institutions.

“It’s a great day for banks and big polluters,” Ralston said. “They figured out in 13 months how to make ordinary people pay a carbon tax. There are a few one-time benefits, but the real beneficiaries here are the big banks.”

The government is also sweetening the carbon tax deal with a one-time-only “climate action dividend” of $100, to be sent out in June. People are encouraged to spend it on something that helps reduce greenhouse gas emissions, but there are no strings attached.

The carbon tax is based on $10 per tonne of carbon emissions, rising by $5 a year to $30 in 2012.

NDP environment critic Shane Simpson questioned whether 2.4 cents per litre on the price of gasoline will be enough to change people’s driving habits. He also noted the government is increasing financial incentives to oil and gas exploration.

The budget also includes $1 billion in government spending on climate change efforts. These include $370 million for public transportation, $57 million for bioenergy and alternative energy such as solar power, $31 million for innovation and carbon storage in forests and related industry, and $49 million to prepare for global warming by improving river flow data and funding flood protection works.