Just the Facts: Is there a cure for “carbon price phobia”?

We've just finished crunching the numbers to see how British Columbia’s pioneering carbon tax shift performed in its first five years. Check out our oped in the Globe and Mail and follow this blog series, where we tackle the biggest questions about the policy.

The conventional political wisdom across most of Canada (and the U.S.) is that carbon taxes are a political loser. That perception is fed in part by the (mistaken) belief that Stephane Dion lost the 2008 election because of his proposed green tax shift. But B.C. actually passed a carbon tax, and the political fallout there has been neutral at worst, and arguably slightly positive. For the first few years after the tax was passed, public support for it hovered around 50%, and has been consistently above that since late 2011. That’s a remarkably high level of support for any tax – particularly in a province not known for its love of new taxes (think HST).

The opposition NDP decided to make the carbon tax a major issue in the 2009 BC election, with its “axe the tax” campaign. The result: many of the NDP’s traditional ‘green’ supporters shifted their votes to the Liberals, who ended up increasing their seat count. Prominent conservative columnist Andrew Coyne heralded this as an example of how a right-of-centre party can build a successful blue-green voting coalition. Perhaps to avoid that, the left-leaning NDP subsequently changed its position, and now firmly supports the carbon tax shift, albeit with some differences over how to spend the revenues.

On the whole, while one cannot say that the carbon tax shift was a big political winner for the BC Liberals, it certainly was not a loser. (For more specifics, see the OECD-commissioned report on this.) And, by the way, the same is true for the governments in Alberta and Quebec that brought in their carbon price policies. The myth that carbon pricing is bad politics simply doesn’t stand up to scrutiny, when you look at the places that have actually done it.

When you add it all up: the lowest fuel use level in Canada, one of the lowest income tax rates, a growing economy (positioned well for the future), and the re-election of its political proponents – BC’s carbon tax shift looks like a smart cure for carbon price phobia.

To learn more about the results of the B.C. carbon tax, including its environmental, economic, and political impacts, follow the series:

The true story of how B.C’s carbon tax is working

Did the carbon tax shift burden or buoy B.C’s economy?

Is B.C’s carbon tax shift a silver bullet solution?

What’s behind B.C’s whopping fuel use drop?

Appendix: A Note on Research Methods