BC Carbon Tax - what the heck does it mean when the tax is revenue neutral

Do you know that the BC Carbon Tax is a “revenue neutral” tax?  What the heck does it mean anyway?

Simplily put, it means that all the money that individuals and businesses/industires pay on Carbon Tax is recycled back to all of us via tax reductions.  The purpose of this type of incentive is to “shift tax” - charge more for bad tax (i.e. pollution/Greenhouse gas emission) and reduce good tax (i.e. income).  The BC Government has actually prepared 10 case studies (Table 1.3 on P.17) to help us realize how we might all be benefited in every income category.  While the information is somewhat available, it is not easy for find!!  

You might ask, but someone or one of the sectors must pay more for Carbon Tax than received back from the government!  

This is TRUE, because if everyone gets exactly the same they pay back from the goverment, then there is absolutely no use for this policy (and perhaps that’s why many think that revenue neutral is such a stupid idea?!). The breakdown, simpily put, is like this:

• ~64% of the Carbon Tax is paid back to individuals through tax credits (for lower income families) and tax reductions;
• 30% of the Carbon Tax is paid by the indivudials 

64% for individual tax credits and income tax reductions is clearly outlined in the 2008 Budget (1,179M returned out of 1,849M total collected).  From Environment Canada’s breakdown of BC’s GHG inventory in 2006 it stated at the bottom of the page that “British Columbians are directly responsible for about 30% of provincial GHG emissions, amounting to about 4.5 tonnes per person, per year.”

Well, not a bad deal as individuals in BC!  Hopefully now the “revenue neutral” carbon tax makes a little bit more sense.