In the last 6 months of 2008 the BC government collected $300 million in carbon tax revenues ($38 million less than budgeted). (http://www.bcbudget.gov.bc.ca/2009/bfp/2009_Budget_Fiscal_Plan.pdf).

We can multiply Statistics Canada’s freely available estimates of Jul - Dec 2008 gasoline and diesel sales by the carbon tax rates to learn that BC collected about $55 million in carbon taxes on gasoline and $26 million in carbon taxes on diesel fuel, which combine to suggest that consumers of these fuels made up 27% of 2008 carbon tax revenues. Households (gasoline) APPEAR to have remitted about $2 in new carbon taxes for every $1 commercial fuel consumers (diesel) remitted. And that was after BC gasoline sales fell 2.2% between 2007 and 2008, while diesel sales jumped up 8.9%.

Carbon tax revenues collected from consumers of transportation fuels fell well short of the original budget forecast–in my view because the forecast did not make any sense. Carbon tax revenues collected on home heating bills (natural gas and propane) significantly exceeded the original budget forecast (largely because it was a cold winter), while carbon taxes collected from industrial fossil fuel consumers fell more than $80 million short of the original budget forecast.

What is most interesting is that Statistics Canada reports that between Nov 2008 and the end of March 2009, Vancouver retail (all taxes included) prices for diesel fuel fell from 104.4 centre per litre to 81.40 cents per litre, while retail prices for premium unleaded gasoline increased from 109.4 to 112.1/litre. So the oil companies have shifted wholesale prices to effectively remove the entire retail price impact of the carbon tax burden from the diesel fleet to the gasoline fleet–in other words, from the market segment that has demonstrated demand growth since 1998 to the segment that was already slowing shrinking before the tax was introduced.

It also means that households essentially paid 100% of the carbon tax collected on both gasoline and diesel, and commercial fuel customers remained largely untouched by the new tax. Using wholesale price adjustments to move the tax burden from where government first puts it to someplace else is how the private sector maximizes profits.

This retail price behaviour is consistent with what we have seen in every CO2 taxing nation since 1991–in that there is little to no correlation between the distribution of the retail price increases and the government’s actual distribution of the tax. This is one of a number of reasons consumption taxes are highly inefficient market behaviour modification mechanisms in real life, even though they appear efficient in theory.

The only way to make an energy consumption tax actually work the way governments want it to is to add price control regulations to the tax measure. Hopefully we have learned the pitfalls of price controls and won’t be going there. But for the theory that carbon taxes will change behaviour to play out in real life, governments always have to follow up with price controls.
That BC gasoline consumption only fell 2.2% in 2008 is actually surprising, given the onslaught of the economic recession and the well-established pre-2008 trend of limited demand growth (between 2000 and 2008 gasoline demand in BC grew, on average, 0.4% per year, with population growth well over 2.0% per year).