Scaling up ambition: Lessons from British Columbia’s carbon tax
Many consider the British Columbia (B.C.) carbon tax to be a ‘textbook’ example of a broad-based, revenue-neutral carbon tax (World Bank, 2017). The carbon tax was introduced in 2008 at a rate of Canadian Dollars (CAD) 10 per metric ton of carbon dioxide (CO2) equivalent and annually raised by CAD 5, until reaching CAD 30 in 2012. The tax is paid by all individuals and businesses that purchase or use fuel in the province. Initially, the revenues from the carbon tax were used to fund reductions in other taxes on citizens and businesses. In May 2013, the government froze carbon tax rates until 2017. As of April 2018, the tax has been increasing again, taking steps of CAD 5 annually to reach CAD 50 in 2021. A portion of these new incremental revenues will be spent on new green initiatives, in addition to measures consistent with the previous revenue-neutral policy.
British Columbia´s carbon tax can be considered a good practice as it involves a broad range of stakeholders that are actively pushing for ambitious tax rates and the long-standing engagement of the government of British Columbia for ambitious climate policies. Also, the carbon tax has given B.C.’s economy a real push to invest in innovative low-carbon production technologies.