Above all else, I believe in pragmatism. Laws and policies should be evaluated not by ideology, but by whether (or not) they work. As such, it has been very interesting to see results from things like marijuana legalization in (first) Colorado and now Washington state, or the availability of free or low-cost contraception on teen pregnancy and abortion rates in Colorado.
And here’s another one, but this time from Canada, and it is rife with irony. I’m sure most Americans don’t know it, but the current Prime Minister of Canada, Stephen Harper, is a conservative (similar in some ways to conservatives in the US). For example, he has repeatedly claimed that a carbon tax to fight climate change would “destroy jobs and growth”. Sound familiar?
There’s just one big problem. One of Canada’s largest provinces, British Columbia, has had a carbon tax for the last six years, and rather than being a “job killer”, BC’s economy has outperformed the rest of Canada over the same time. How? The carbon tax was designed to be “revenue neutral” — by law the funds raised by the carbon tax must be matched by cuts in other taxes (similar provisions have been included in carbon taxes proposed in the US). In fact, the province has cut more in income and other taxes than it has raised from carbon taxes. As a result, BC now has the lowest personal income tax rate in Canada and one of the lowest corporate tax rates in North America. And BC’s GDP is doing better than the rest of Canada.
And that doesn’t count the health and economic benefits from reducing pollution caused by burning fossil fuels.
How has the carbon tax done in reducing carbon emissions? Extremely well actually. Since the tax was enacted, fuel use in BC has dropped by a stunning 16%, while in the rest of Canada fuel use has gone up 3%. To put that in perspective, Canada’s Kyoto accords target was a 6% reduction in 20 years, but BC managed a 16% reduction in just six.
To borrow (and mangle) a phrase from Obama, I’m not against taxes, but I’m against stupid taxes. I think our taxes are completely wrong. We tax things that we should be encouraging, like income and sales, while not taxing things that we should be discouraging, like pollution and the consumption of scarce resources. A carbon tax that offsets income and sales taxes has always seemed like an good idea to me. It is heartening to see strong evidence that it actually works, with excellent results.