Crawl Across the Ocean

Tuesday, February 19, 2008

B.C. Budget 2008

The intro page is here.

The table of contents for the budget details is here.

My opinion? This is a pretty good budget. The main element is a carbon tax to be phased in over the next few years (starting at $10/tonne of CO2 and rising to $30/tonne) and offset by reductions in the bottom two income tax brackets and lower business taxes. The neutrality (i.e. not increasing the total tax level) of the tax is protected by a legislative requirement that each budget contain a three year plan for making sure that increases to the carbon tax are offset by reductions in other taxes. There will also be a carbon tax rebate (up to $100/year) for low income individuals so that the poor don't suffer too much from the new tax.

In addition to the new tax there is a wide scattering of environmental measures, the most important of which might be provincial sales tax exemptions for energy efficient / energy saving products and appliances.

Aside from that it is mainly more of the same, with most new funding going to health spending, as you might expect.

On a personal note, I appreciate that the decision to scrap the auto rental tax ($1.50/day) for rentals of 8 hours or less, rather than retroactively applying it to carsharing organizations. Is there any good reason (other than squeezing tourists, I suppose) to have a special tax on auto rentals anyway?

There's even good news for right-wing folks - once B.C. gets hit by the recession and housing downturn which is inevitably coming no matter what we do, they can blame it all on the carbon tax.

My two main concerns (somewhat inherently contradictory although not really, I think taxes should be higher in the upper brackets) are that a) the government should be reducing our debt, not increasing it (the budget forecasts total government debt rising from $37B to $42B over the next 3 years), while economic times are still pretty good, but the debt load has declined under the Liberals so far and they have followed the revenue-lowballing example set by Paul Martin and generally have ended up with larger revenues than forecast, so this is not a crisis situation, just a wish for a different emphasis...

...and b) that there isn't much here to change the fact that B.C. ranks near the bottom of the country in terms of how it treats the poor and on social indicators in general.

Overall though, this is a job well done, and the implementation of a revenue neutral carbon tax sets a valuable precedent which other jurisdictions will hopefully follow.

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4 Comments:

  • A carbon tax, really?! I'm shocked, I didn't believe a word of the rumours. A real step forward, finally

    By Anonymous V, at 8:30 PM  

  • This really is well done. I didn't think they'd be as bold as they were. The political boogie man of the Carbon Tax must be a little less scary today than it was yesterday. It will be even less scary when Campbell wins another term.

    By Blogger KevinG, at 7:37 AM  

  • I'm unhappy about the "revenue neutrality" of the carbon tax.

    1) If it works as the environmentalists want (ie: as an incentive to encourage people to stop polluting), then we will actually have less tax money going to the government to pay for services - does that mean more debt accumulation?

    2) Money collected through carbon taxes has to go to general revenue, so no funds are being raised to support green initiatives. Meanwhile, the oil and gas industry gets a nice big tax break to continue their work.

    By Anonymous wondering, at 9:36 AM  

  • Kevin - it's helpful for Campbell and co. they are on the right so they can't be flanked by climate change deniers and single minded tax haters on that side, but yeah, I agree with your points

    Wondering: re 1) If consumption of carbon drops then either other taxes could be raised to compensate, or the per tonne rate could be increased. Given that the neutrality is intended to be updated annually in each budget it seems unlikely that consumption patterns will change fast enough to cause a real issue (and if they do that will mean this was a very successful policy)

    Re 2) Large emitters are targetted to be included in a cap and trade type program, so we will have to wait and see what happens with regard to that before passing judgement. It's true that no new funds are being raised to support green initiatives, but one also to consider the political viability of the carbon tax, a tax which raises money for green programs is far more vulnerable (in my opinion) to being removed/reversed at a later date.

    By Blogger Declan, at 10:18 PM  

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