BC’s Carbon Tax Shift
After Five Years:
Analysis of Environmental and
Economic Impacts
Stephanie Cairns
On behalf of Prof. Stewart Elgie and Jessica McClay
Who We Are and What We Do
National environment-economy
think tank and research network
100+ profs from Canada and world
Leaders from NGO, business, policy
Secretariat at Univ. of Ottawa
• Ideas: Produce rigorous
research and reports
• Connect: High-impact events
and dialogues
• Results: Outreach aimed at
informing policy
2
BC’s Carbon Tax Shift After 5 Years:
Methodology
• Focus on environmental effectiveness and
economic impact
• StatsCan and Environment Canada data
• Focus mainly on fossil fuels (vs GHGs)
• To help isolate effects of tax
– Compared BC with rest of Canada
– Examined trends pre- and post tax
– Compared with non-taxed fuels
• Caution: further economic analysis needed to
reach more firm conclusions about these effects
and causality
Overall Fuel Use Change:
BC vs Canada (2008-12)
Per capita consumption of petrol. products subject to the BC tax (% change)
BC
Canada
Difference
2008/09
2009/10
2010/11
2011/12
-5.4%
-3.4%
-2.1%
-3.6%
-0.7%
-3.0%
-2.4%
3.9%
-6.3%
-7.1%
1.7%
-8.8%
2008-12
TOTAL
-17.4%
1.5%
-18.8%
Source: Elgie, McClay (2013)
• BC’s fuel use down 18.8% vs rest of Canada since C tax shift
• So economic downturn doesn’t explain it (all provs had that)
Other Pre-existing Drivers?
Sales of fuels subject to BC carbon tax (2000-12)
cubic metres/capita
3.0
2.5
Rest of Canada
2.0
British Columbia
Carbon Tax
1.5
Source: Elgie, McClay (2013)
• BC & Canada tracked consistently pre-2008 on fuel
efficiency, but the gap grew rapidly after 2008 when the
carbon tax introduced
Occurring Across All Fuel Types
Sales of specific petroleum fuels (2007/8 to 2011/12)
20%
% change in cubic metres per capita
10%
0%
-10%
-20%
British Columbia
-30%
Rest of Canada
-40%
-50%
-60%
-70%
-80%
* Excludes little-used fuels (Naptha, Butane)
Source: Elgie, McClay (2013)
*Aviation fuel is the exception (largely exempt!)
GHG changes (2008-11)
Per capita GHG emissions for sources covered by the BC tax (% change)
2008
2009
2010
2011
2008-11
Total
British Columbia
-1.5%
-6.7%
-1.1%
-2.4%
-10.0%
Rest of Canada
-3.6%
-3.9%
-0.9%
3.9%
-1.1%
Difference
2.1%*
-2.8%
-0.2%
-6.3%
-8.9%
Source: Elgie, McClay (2013)
• Slightly smaller gap, maybe due to:
– Shorter time (no 2012)
– GHG data includes first 6 months of 2008 (pre C-tax)
– Data differences?
Effects on Economy
GDP Change: BC vs Canada 2008-11
Jurisdiction
2008
2009
2010
B.C.
-1.16%
-3.90%
1.64%
2011 2008-11 Total
-0.15%
1.92%
Canada
-0.45%
-3.88%
1.91%
1.38%
-0.23%
• BC’s GDP has stayed similar to rest of Canada’s since 2008
– But carbon tax’s effect is very small part
– Similar to EU experience (small positive GDP change)
• No doubt winners and losers, e.g:
– Clean tech sector has doubled
– Very small impacts on agriculture (est. <0.5%, prelim.)
Taxpayer Impacts
Net Income Tax Rebates from the C Tax Shift ($ million)
Revenues
192
Net Rebate
960
124
2011/12 (forecast)
741
187
2010/11
542
7
2009/10
306
2008/09
• The tax shift has resulted in lower overall taxes for
BCers (about $500M)
• BC now has lowest corp (tied) and personal income tax
Overall
• BC now has
– Lowest fuel use in Canada
– Lowest income tax
– Healthy economy (with fastgrowing clean tech)
Greenery in Canada
We have a winner
B.C.’s carbon tax woos sceptics
Jul 21st 2011
“Best-designed carbon tax in the world”
(Prof. Paul Ekins, University College London)