By Rachel Fraser
The $15 per tonne increase in the B.C. carbon tax went into effect on April 1st, 2024, which works out to about three cents on a litre of gasoline, but what that actually means to the bank account of the average British Columbian is far from clear.
Amid protests claiming that the tax contributes to an already out of control cost of living and inflation, Prime Minister Justin Trudeau says the co-joined Canada Carbon Rebate puts more money in the pockets of most Canadians. Over 200 economists have signed an open letter saying it’s the cheapest way to effectively combat climate change, and that it has a negligible effect on inflation and cost of living.
Trudeau’s reliance on the federal rebate to sweeten the deal isn’t as reassuring in B.C. as it might be in most of the country; while the BC carbon tax matches the federal tax rate, our rebate, known as the Climate Action Tax Credit, is structured differently. The Federal program is revenue neutral, and BC’s carbon tax was originally, also, which means all revenues must be returned, either in rebates or in equivalent reductions to other taxes. Unlike the Federal program, which is required by law to return 90 per cent of revenues directly to households, the BC NDP changed the tax code to remove the revenue neutrality and the reporting requirement in their 2017 budget.
The federal rebate is based on household structure – singles get a certain amount, and households with dependents get more depending on the number of dependents – but the BC rebate is based on household structure AND income. Only those with annual incomes of $39,115 or less, or families with $50,170 will receive the full rebate, and only an estimated 65 per cent of British Columbians will qualify to receive even a partial rebate.
In 2023, the Globe and Mail broke down how BC’s carbon tax revenues were being spent at the time: “Of $2.24B in revenue, about $2B goes back to some taxpayers: the low-income tax credit costs $363M and the reduced small business taxes amount to $1.61B. The rest goes to spending $248M on CleanBC programs, small investments in a range of initiatives to cut emissions.”
The $15 per tonne tax increase translates to $229M in new revenue in the 2024 Provincial budget. In recent years, the portion of revenues directed to the rebate was relatively small, but new spending on enhancements to the Climate Action Tax Credit will be $687M. The provincial budgets do not include a full accounting of what the $2.65B in total projected carbon tax revenues for the 2024/2025 fiscal year will be used for.
Parliamentary Budget Officer (PBO) Yves Giroux told MPs in the House of Commons on March 27th, 2024, that for Canadians as a whole, based on the federal tax and rebate programs, 80 per cent of households end up better off from a fiscal standpoint. However, when you factor in the effects the tax is assumed to have on some sectors of the country’s economy, Giroux said, “Then, we find that most Canadian families, in provinces where the federal backstop regime (the federal rebate) is in place, will see a small negative impact of the carbon tax.”
The National Post reported that adding to the complexity of how the tax affects Canadians is the economic effects of a changing climate, and cited a report by the PBO in 2022 that tried to account for that, saying “Extreme weather had already reduced Canada’s GDP by 0.8 per cent between 1981 and 2021 and that the GDP could be further reduced by five per cent by 2100. But the report noted that ‘accounting for the cost of climate change is not straightforward.”
The Village of Valemount receives funding through the Local Government Climate Action Program (LGCAP), a provincial initiative to help legislated climate targets and prepare communities for the impacts of changing climate. As part of the CleanBC roadmap, these are the type of climate-related initiatives that the Carbon Tax ostensibly helps to fund, but there is no direct funding mechanism or reporting tying the two together. According to Valemount’s Director of Finance, Lori McNee, the Village received $48,082 in each of 2022 and 2023 and has been promised $140,884 over the next 3 years. A portion of these funds have been used to purchase an electric truck for Public Works, as well as a charger for the PW yard. The remainder has not yet been allocated.
The increase works out to 3.3¢ more per litre of gasoline, to a total 17.61¢ carbon price built into every litre. Diesel increased 4¢ per litre, and propane 2.3¢.
