A carbon tax is a levy charged as a penalty for the emission of greenhouse gases, caused by burning hydrocarbons.
Carbon taxes can be seen as a disincentive tax for the consumption of oil and gas energy. All fossil fuels, such as gasoline, natural gas, coal and oil, are hydrocarbons and give off carbon dioxide during combustion. Some give off methane as well.
Carbon taxes are intended to be used to correct the otherwise uncompensated costs of pollution and alleviate the associated greenhouse effect. Another goal is to make green operations more profitable by contrast.
Alternative Measures of Carbon Tax:
A common alternative to carbon taxes is a cap and trade system, where those exceeding a set cap for greenhouse gases would have to buy carbon offset credits at market value from those under the cap.
Myth-1: The carbon tax is just a tax grab.
Fact: Every dollar raised by the carbon tax is returned to individuals and businesses through tax reductions. None of the carbon tax revenue is used to fund government spending.
Since it was first introduced in 2008, the carbon tax has returned $500 million more to taxpayers in tax reductions than it has raised in revenue.
Myth-2: Industry/business are exempt from the carbon tax.
Fact: Industry is not exempt from the carbon tax. Industry is required to pay the carbon tax on the purchase and use of fuels the same as everyone else and they also pay tax at the same rate. For example, the oil and gas industry will pay the carbon tax on all combustion of fuels, estimated at 85 per cent of their total emissions, including flaring, and the cement industry will pay the tax based on the coal and tires they burn in the production of cement.
Myth-3: Many emissions are not taxed.
Fact: The carbon tax has the broadest base possible given current technological, measurement and data limitations and applies to virtually all emissions from fossil fuel combustion in British Columbia captured in Environment Canada’s National Inventory Report.
The carbon tax applies to virually all emissions from burning fuels, which accounts for an estimated 70 per cent of total emissions in British Columbia.
Of the approximately 30 per cent of emissions that are not from fuels:
• 10 per cent are from non-energy agricultural uses (e.g. emissions from enteric fermentation, manure management, and agricultural soils) and waste (landfills);
• 10 per cent are from fugitive emissions which cannot currently be accurately measured;
• 6 per cent are non-combustion industrial process emissions; and
• 5 per cent are from net deforestation.
The Province will look at options to extend the carbon tax to emissions beyond those generated by the purchase and use of fuels, and integrate the carbon tax with other climate action initiates such as cap-and-trade.