End of consumer carbon tax means cheaper gas but leaves $1.5B hole in B.C. budget: business prof

British Columbia is facing a significant revenue shortfall with the impending end of the province’s consumer carbon tax. The budget released earlier this month revealed that the province was expecting to lose roughly $1.5 billion in revenue streams once the tax is scrapped. This loss will need to be compensated for through either spending cuts or tax increases elsewhere.

Werner Antweiler, an associate professor at the Sauder School of Business at the University of British Columbia, highlighted that the end of the consumer carbon tax will have varying impacts on different groups. While drivers will see relief at the gas station with savings of up to 17 cents per litre, low-income households who benefited from the climate action tax credit may end up losing out.

Antweiler explained that people in lower-income households tend to drive less, especially in urban areas with accessible transit systems. On the other hand, wealthier individuals tend to drive more. As a result, those who previously received the climate action tax credit may not see equal savings once the carbon tax is eliminated.

Furthermore, organizations that received funding from the tax, such as TransLink and B.C. Transit, will also need to find alternative sources of revenue to make up for the shortfalls.

The B.C. carbon price has been in place since 2008, making the province the first jurisdiction in North America to implement such a levy. The revenue generated from the tax was initially meant to be revenue neutral, with costs returned to consumers through tax cuts. However, as the price of carbon increased, the government started using some of the revenue to fund climate action initiatives while still providing a climate action tax credit to consumers.

With the impending cancellation of the consumer carbon tax, Energy Minister Adrian Dix stated that the government would introduce legislation before the end of the fiscal year to address the lost revenue. Premier David Eby emphasized that while the consumer carbon tax was being repealed, the province would continue to ensure that major polluters pay for their emissions through the existing carbon pricing system for large industrial emitters.

The decision to end the tax and associated rebate has raised concerns among the B.C. Conservatives and the B.C. Greens. The Conservatives fear that the government may increase charges on businesses, indirectly affecting consumers. The Greens have called for a fairer carbon pricing system to ensure that big industrial polluters pay the same per tonne of carbon as everyday British Columbians.

As British Columbia navigates the end of the consumer carbon tax, the government will need to carefully consider how to address the revenue shortfall and mitigate the impacts on different groups within the province.