B.C.’S CARBON TAX – A FAILED EXPERIMENT
ADDRESS TO THE SURREY BOARD OF TRADE
SEPTEMBER 13, 2012
BY JORDAN BATEMAN, B.C. DIRECTOR – CANADIAN TAXPAYERS FEDERATION
Thank you for this opportunity.
The other night, I was reciting the nursery rhyme Humpty Dumpty to my two year old
son, when it hit me. Humpty Dumpty is the perfect allegory for the B.C. carbon tax. You
all know the rhyme:
Humpty Dumpty sat on a wall,
Humpty Dumpty had a great fall.
All the king's horses and all the king's men
Couldn't put Humpty together again.
The carbon tax is a failed social and economic experiment—and all the fixes in the world
won’t put this Humpty Dumpty public policy together again.
I can list all sorts of reasons from a provincial perspective as to why this carbon tax
doesn’t work—
 it’s an unfair shift onto rural and suburban taxpayers;
 it’s revenue neutral for government but anything but for taxpayers;
 it doesn’t tax or punish your emissions, only your fuel intake;
 it raises the cost of every good and service moved anywhere in this province;
 it was meant to tie into a cap and trade scheme which never materialized;
 it is especially onerous on lower income people. That’s called a regressive tax.
But we’re here today to talk about business in Surrey. I live next door in Langley—was a
Township Councillor there for five years before moving to this role—so I feel like I have
a front row, balcony seat to the tremendous growth that’s happening here. It really is
amazing, and you, your community, council and, of course, Mayor Watts, deserve
congratulations. It has certainly been a boost to Langley, like a favorable wind pushing
my community’s growth along.
The carbon tax, however, has been bad for Surrey’s economy. It is hurting your ability to
compete with businesses located minutes away across the US border. It is costing you
more money to run your business. And this pain isn’t paying off—the carbon tax isn’t
accomplishing its goal.
None of this is news to you. You pay your bills. You see your vehicle fuel bills, your
natural gas bill, your suppliers’ invoices with the fuel surcharge. You see the lineups at
the U.S. border.
The Lower Mainland pays 49 cents per litre in fuel taxes, including 7 cents per litre in
carbon tax (6.67 cents plus 5% HST on top—ya gotta love the tax on tax). This is the
highest on the continent.
High fuel taxes are driving customers out of your community. Abbotsford, subject to the
carbon tax but free of TransLink, and saving 12 cents per litre in taxes—registered a onethird increase in gasoline and diesel sales from 2007 to 2010. Their population only grew
5.5 per cent in that time. People take the opportunity to go east to save 12 cents per
litre on gas whenever they can.
Anyone who has seen the lineups at Pacific Highway or Peace Arch border crossings
knows the draw of the U.S. You can save 35-50 cents per litre of gas by filling up in the
States. This is a significant part of the draw south, which is why we read news reports of
U.S. shoppers demanding time and space away from Canadians at the Bellingham
Costco. Canadian travellers have prompted Bellingham airport to build a $17 million
expansion—tripling the size of the airport there. We see reports of Canadians filling
garbage bags (turned out to be gas cans in garbage bags). I’m sure I’m not the only one
who has wished they could fill their back seat with cheap U.S. gas.
These are people who leave Surrey, trying to save money. That means fewer hours
shopping here. These are customers who aren’t spending time at Morgan Crossing or
Clayton Village or downtown Cloverdale or Central City. That hurts your bottom line—
especially the nearly 1,800 of you Surrey businesses in retail (13 per cent of all Surrey
businesses).
It goes beyond retailers. The B.C. Jobs and Investment Board—a B.C. government
appointed review panel—issued its interim report on competitiveness this week, and it
recommends that B.C. eliminate or significantly reduce the carbon tax, based on its
fiscal impacts to the port sector’s competitiveness.
Transportation is 4 per cent of Surrey’s business licences—542 companies. The chair of
the Jobs board, Ray Castelli, said this “particular sector is being disadvantaged.”
Truckers know it—the B.C. Trucking Association says the average 5-axle tractor semitrailer pays more than $3,000 a year in carbon tax. And that’s assuming 25 per cent of
its fuel was bought in the U.S.
Guess what happens to that cost? It gets passed along to businesses and consumers
who need the products on those trucks. The carbon tax raises your cost of doing
business.
Fraser Surrey Docks is celebrating its 50th anniversary this year. We don’t always think
this way, but Surrey is a great port city. Port Metro Vancouver says 4,000 Surrey
residents are employed thanks to the port, generating $220 million in wages and $440
million in GDP. These are good jobs—averaging $56,000 a year, 45 per cent higher than
the national average.
With the rapid growth in Surrey—nearly a thousand people moving here every month—
we need more jobs like the ones generated in transportation. These are the people who
are going to use your accounting firm, your legal services, eat at your restaurants, buy
houses through your realty company and buy your stuff. If the carbon tax is slowing that
job growth—as the Jobs Board says—it needs to go.
Other sectors are negatively affected. Construction and development—huge in Surrey.
One-fifth of all business licences; nearly 3,000 businesses—not counting Realtors. The
B.C. Government says neighbourhood design and building style is a massive factor in
future greenhouse gas emissions. But you builders pay the same carbon tax to move
workers and supplies whether you’re building a LEED platinum, mixed-use high rise—or
a strip mall in the middle of nowhere. It doesn’t make sense. And every added cost in
construction ends up on the customer’s bottom line—driving up housing prices.
This year’s one-time grant to the greenhouse growers doesn’t make that industry
sustainable long term. A five-acre greenhouse pays $50,000 a year in carbon tax. How
can it compete with the U.S.? No wonder the Greenhouse Growers Association reports
that three smaller operations closed, and others moved to Alberta and the United
States.
B.C.’s cement industry is reeling. Their cement is subject to carbon tax--$20 million
worth since 2008—while their U.S. competitors can ship in cement powder tax-free. If
your business services the Lehigh plant in Delta or Lafarge in Richmond, you know their
operation is way down—and that’s costing you money.
Manufacturers are especially sensitive to outside competition—can things be done
cheaper elsewhere? So the carbon tax is another hurdle to their ability to compete. And
it’s bad environment policy—if you have a manufacturing company that builds clean
energy windmills, you still pay the same carbon tax on your supplies and fuel as a
manufacturer making dirty sprockets.
I don’t know about you, but I can see this Humpty Dumpty starting to rock back and
forth pretty good now.
Of course, politicians will tell you that the carbon tax really doesn’t cost you any more,
because it’s revenue neutral.
They’re right about revenue neutrality—for government. For taxpayers, not so much. Of
the $1.2 billion in tax credits funded by the carbon tax, only $228 million is a personal
income tax reduction (a 5% cut in the provincial share, unchanged since 2008). While
the carbon tax has increased by three times, the broadest tax break stayed the same.
There’s an annual credit for lowest of low income British Columbians that doesn’t even
cover three Lower Mainland monthly bus passes.
The B.C. Budget shows that government plans to claw back half of the corporate income
tax cut—funded by the carbon tax—in 2014.
Your carbon tax dollars also fund tens of millions of dollars in boutique tax credits for
kids’ art and fitness classes and digital media tax credits.
The tax credits are better than nothing, but not worth keeping the tax for. Better to
scrap the whole system—the carbon tax and the corresponding tax breaks. We think
most people would come out ahead. Certainly Surrey businesses and residents would.
Humpty is teetering pretty perilously.
But does the carbon tax work? Isn’t it making the world a better place?
No, it’s not.
From 2007 to 2010, Surrey’s population grew 9 per cent. Surrey’s gasoline consumption
went up 18 per cent. Diesel consumption more than doubled. Carbon dioxide emissions
went up 17 per cent—almost twice the rate of population growth.
Don’t feel bad. This is repeated in dozens of communities across B.C.
Forget the nonsensical 15 per cent fuel reduction touted by the Ottawa professor that
the press love to quote. It doesn’t include consumer seepage to Alberta or the U.S.,
adjustment for weather conditions and completely ignores the fact that gasoline and
diesel purchases were up in B.C., according to Statistics Canada.
Plus, a carbon tax should be measured by greenhouse gas emissions—not fuel intake.
After all, the evil it is supposedly trying to solve is what’s coming out the smoke stacks,
not necessarily what’s going in. But we tax in, not out.
B.C.’s greenhouse gas emissions dropped 4.5 per cent (2.9 million tonnes) from 2007 to
2010. But even the tax’s biggest booster, Environment Minister Terry Lake, admits that
at least two-thirds of that drop was due to the recession—not the carbon tax.
Here’s an even more shocking fact. Canada-wide, GHG emissions fell 8 per cent from
2007 to 2010. And that drop—nearly twice B.C.’s reduction—occurred without a carbon
tax anywhere but here.
Humpty Dumpty is on the ground, shattered. Now the carbon tax supporters are rushing
with dozens of suggested fixes. But why bother? What’s the point of putting it back
together again? The tax hasn’t worked, no other jurisdiction in North America has
followed us, and the Suzuki and Pembina Foundations admit it would need to almost
septuple the tax—that’s multiply it by nearly seven times—to create enough economic
chaos to drive our emissions down to their 2020 goals. That means doubling the tax at
the gas pump from 49 cents to nearly one dollar per litre. Would your business survive
that? Plus they advocate spending that money—not giving it back in tax breaks.
The B.C. Chamber of Commerce has recommended another review of the carbon tax
and its effect on the economy. That work has already been done by various industry
groups, the Jobs Board, the CTF and others. We can study it even longer, but in the end
it’s just going to keep costing your business and your family money.
We know it’s not working. I’m hopeful more people will simply cut their losses on the
carbon tax and join the CTF’s position by advocating for the immediate repeal of the B.C.
carbon tax, including all revenue neutrality tools if necessary to balance the budget.
Thank you for your attention.