August 5, 2016

WAY TO GO, PIGOU!:

A Model Carbon Tax : Canada once again leads the way - this time on how a carbon tax can fight climate change while growing the economy. (Michael PurzyckiAugust 5, 2016, Washington Monthly)

This fall, voters in Washington State could become the first in the country to pass a carbon tax. If approved, Initiative 732 (I-732) would levy a $25 per ton tax on carbon emissions from fossil fuel, which would in turn fund a one percent cut in sales taxes as well as rebates for lower-income households.

Many economists agree that one of the most efficient ways to reduce the carbon emissions that contribute to climate change is to tax it.  But as appealing as it might be in theory, could a carbon tax work in practice?

In the Canadian province of British Columbia (BC), the answer seems to be "yes." In fact, BC's carbon tax - levied in 2008 - might be an ideal model for how a carbon tax could help to combat climate change without damaging economic growth.

BC's carbon tax started at C$10 per metric ton, and has been $C30 per metric ton (about $23 in U.S. money) since 2012. In real-world impacts, the effect of this tax has been to raise the price of gasoline by 6.67 Canadian cents per liter (roughly 25 U.S. cents per gallon).

The tax has had undeniably significant effects on the province's consumption of fossil fuels and, as a consequence, its carbon emissions. Stewart Elgie, a law and economics professor at the University of Ottawa, calculates that petroleum use per capita fell more than 16% in BC in the first five years of the carbon tax, while it rose 3% in the rest of Canada during the same period.

Posted by at August 5, 2016 12:20 PM

  

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