Axe Campbell's Tax

If you think Campbell's 2.4 cents/L is bad, imagine $481 per ton of carbon, $1.30 per gallon (15 times Campbell's starting point)! That is what Campbell is putting in place, a framework to radically shift the tax burden from ability to pay to behavior modification, and to jack-up the price until you stop driving.

Nothing more clearly shows that the "greens" are supporters of the market system with a blind faith in the "price system". Rather than regulating greenhouse gas emissions, those who have blind faith in the market argue that price should dictate behavior. The Carbon Tax Center's website acknowledges that energy is price inelastic; meaning that the percentage consumed decreases by less than the percentage increase in price. Hence it is like hitting a jackass with a two-by-four; it takes a hell of a wallop to get any response. That may be funny in a cartoon, but in Gordon Campbell's scenario, consumers are the jackass and Campbell is wheeling the two-by-four. (If a sawmill still exists that his polices haven't closed.)

Evidence cited on the Carbon Tax Center's website includes an article on the rebound effect by economists at the University of California. They point out that apart from inelastic price elasticity for gasoline, improved fuel efficiency causes increased travel. They also found that the long-run price elasticity of demand for gasoline was -0.43, i.e. a 1% increase in price results in a 0.43% decrease in demand in the long run, after consumers are able to switch cars, and that only half of the reduction comes from driving less. In other words, Campbell will have to hit British Columbians with a very big price stick in order to see any significant changes in behavior by 2020.

Rather than relying on the price system, changes in regulations and incentives could have more substantial and more equitable effects. By directing incentives on energy efficiencies, and disincentives on energy inefficiencies changes in "consumer capital purchases" could be more substantially affected than they might be through price effects. For example, surcharges on energy inefficient vehicles and tax breaks on hydrogen powered vehicles will help shift purchases. The Campbell government is spending $440 million in one-time $100 rebates to try to bribe British Columbians to accept its carbon tax. The same amount of money spent on insulating older homes, modernizing heating systems in schools and hospitals or subsidizing public transit could have a larger impact on greenhouse gas emissions. "Peak oil", the exhaustion of fossil fuels, will create a price incentive without government's making the change more difficult through carbon taxes. Government's resources should be devoted to regulation and incentives. Campbell doesn't seem to appreciate that as he wields his big stick. Thank him when gas hits $1.50/L in July.

It is important to keep BC's contribution to reducing greenhouse gases in perspective. The population of BC is 4.4 million; world population is almost 6.7 billion. BC's total population is a lost decimal point, almost a rounding error relative to world population. World population increases by more every month than the total population of British Columbia. If BC disappeared, the effect on global climate change would hardly be noticed. That is not to say that British Columbians shouldn't do the right thing, but it is to say that all of the consequences of myopic policies need to be fully considered. It is as important for Campbell's carbon tax to be fair as it is for it to be symbolic, although relatively useless. In other words, AXE CAMPBELL'S TAX.