Environmental Taxes
and Subsidies
Tristan Cox
Environmental Taxes and Subsidies
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Known in government as Ecological Fiscal
Reform
In simple terms, a redirection of income taxes
Green or environmental taxes counter the
pursuit of lower prices by externalizing the true
costs, ensuring the consumer or purchaser is
aware of the costs of the environmental impacts
Taxes and Subsidies
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Environmental taxes and subsidies are “a
strategy that redirects a government’s taxation
and expenditure programs to create an
integrated set of incentives to support the shift
to sustainable development” (National Round
Table on the Environment and the Economy,
2002).
Importance of Tax and Subsidy
Reform
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Canadians and their governments have become
increasingly more aware of climate change and
the surrounding environment
Taxes and subsidies are an economically feasible
way to become more sustainable
Taxes and subsidies are cheap and easy to
implement and have massive impacts to coffers
Some Examples
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See the 2000 B.C Budget on Environmental Initiatives
Part 1-Tax Shifts-Update and Status Report
Ecological Gifts Program
Fuel Taxes or Excise Taxes
Tire recycling fees
Levies and refunds on drink containers
Plastic bag charges or taxes
Oil taxes, which fund oil recycling programs
Some Examples
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Tax breaks for “green” industry, such as mining
and forestry
Carbon emission taxes
Tradable emissions permits
Energy use taxes (vehicle fuels, domestic power,
household heating)
Energy Star program (which has since been
cancelled)
Ecological Gifts Program
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Federal program open to all Canadians
Provides a way for Canadians with ecologically
sensitive land to protect natural areas
Ecologically sensitive land or easements,
covenants, and servitudes on such land are
eligible for special tax assistance
Ecological Gifts Program
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Provides charitable donations deductions for
corporations
Provides donation tax credits for individuals
Favorable income tax treatments for gifts of
ecologically sensitive land
-this includes the provision of a tax credit or
deduction to donors and a reduction in the
taxable capital gains
Fuel Tax or Excise Tax
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Taxes on leaded, unleaded, aviation gasoline's, as
well as diesel and aviation fuels
Payable by the manufacturer or producer at the
times the goods are delivered to the purchaser or
at the time of delivery to the retail outlet
Tends to favor a consumer pays attitude
Fuel Taxes In B.C.
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1975, 10 cents per gallon
but it was reduced to 7
cents per gallon
1978, 7 cents per gallon,
but extended to aviation
fuels
Jan. 1 1979, rate
converted to the
equivalent metric rate of
1.5 cents/L
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Sept. 3 1985, 3.5 cents/L
1987, 5.5 cents/L
1988, 6.5 cents/L
1989, 7.5 cents/L
1990, 8.5 cents/L
1995 to present, 10
cents/L on gasoline and
4 cents/L on diesel and
aviation fuel
Fuel Taxes around Canada
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B.C. is 15 cents/L in
Vancouver and 13.5
cents/L in Victoria
Quebec is 15.2 cents/L
Ontario is 14.7 cents/L
Alberta is 9 cents/L
Saskatchewan is 15
cents/L
Manitoba is 11.5 cents/L
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New Brunswick is 20.7
cents/L
Nova Scotia is 13.5
cents/L
P.E.I is 13 cents/L
Newfoundland is 16.5
cents/L
Northwest Territories is
10.7 cents/L
When Should an Ecotax Kick In?
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An effective ecotax provides a tax credit on
income taxes with certification of ecological
improvements
The tax credit kicks in only if there is sole
dependence on the cooperation of taxes
Questions?
Sources
Backhaus, Jurgen (1998). When Should the Ecotax Kick In? A Cost and Choice
Approach. Kyklos, 51, 565.
Barrow, C.J. ( 1999). Environmental Management, Principles and Practices.
Routledge, New York, 1999.
B.C Budget 2000. Accessed October 24, 2007 from http://www.fin.gov.bc.ca/
archive/budget00/reports/bgt2000_topicbox_c01.htm
Beuregard-Tellier, F. (2006). Ecological Fiscal Reform. Parliamentary Information and
Research Service, March 17, 2006.
Careless, Ric (1997). To Save the Wild Earth. Raincoast Books, Vancouver, 1997
Catalogue of Federal, Provincial, and Territorial Taxes on Energy Consumption
and Transportation. Accessed October 20, 2007 from http://www.fin.gc.ca/
subsidev/sdcat_1E.html
Ecological Gifts Program-What are the tax benefits? Accessed on October 20, 2007
from http://www.cws-scf.ec.gc.ca/egp-pde/default.asp?lang=EN&n=
6C0F56D5-1
Mitchell, John. Accessed on October 20, 2007 from www.on.ec.gc.ca/wildlife/ecogifts/
profile-almeck-e.html
Torrence, K (1997). A Tax by any Other Name. Alberta Report/Newsmagazine, 24, 47.