B.C.’s Revenue-Neutral Carbon Tax
B.C. introduced a revenue-neutral carbon tax in 2008. The carbon tax is applied to the purchase or use of fuels in the province, and covers about 70% of B.C.’s total emissions.
Carbon tax rates started at $10/tonne in 2008, and increased $5 each year until they reached the current rate of $30/tonne in 2012.
The purpose of the carbon tax is to encourage people and businesses to innovate and find the most cost-efficient methods of reducing emissions to pay less in carbon tax. The growing demand for clean technology, in turn, helps unlock financing for climate-friendly investments.
A key principle of the carbon tax is revenue neutrality. This means that every dollar generated by the carbon tax is returned to British Columbians through reductions in other taxes. These include:
- Low income climate action tax credit
- Reduction of 5% in the first two personal income tax rates
- Northern and rural homeowner benefit of up to $200
- General corporate income tax rate reduction
- Small business corporate income tax rate reduction
- Industrial property tax credit
Total Estimated Carbon Tax Revenue Recycling 2008-2015
- Carbon tax revenue: $7.3 billion
- Offsetting tax reductions: $8.9 billion
- Net benefit to taxpayers: $1.6 billion
Tax Rates by Fuel
Because different fuels generate different amounts of greenhouse gas emissions, a $30 per tonne carbon tax rate must be translated into tax rates for specific fuels. Below are rates for select fuels.
Selected Carbon Tax Rates by Fuel Table
|Fuel||Units for Tax||Tax Rate at $30/tonne|
|Diesel (light fuel oil)||¢/litre||7.67|
|Natural gas||¢/cubic meter||5.70|
|Coal - high heat value||$/tonne||62.31|
|Coal - low heat value||$/tonne||53.31|