B.C. carbon tax cut fuel use, didn't hurt economy

When B.C. Premier Christy Clark sits down with her fellow provincial and territorial leaders Wednesday, she might trumpet her government's carbon tax success at what many critics said was impossible: reducing fossil fuel consumption without damaging the economy, the author of a new study suggests.

"You often hear people say you can't have an healthy environment and a strong economy," said Stewart Elgie, a University of Ottawa professor of law and economics. "B.C.'s experience shows that's not true."

Elgie is chair of Sustainable Prosperity, a national network of economics and environment professors funded by the Social Sciences and Humanities Research Council.

Sustainable Prosperity has released a report that shows since the carbon tax shift was introduced in 2008, B.C.'s consumption of fossil fuels has been reduced nearly 19 per cent per capita compared to the rest of Canada, while the province's gross domestic product has kept pace with the country's.

The report is the basis of an article to be published in the next edition of the journal Canadian Public Policy. Elgie said the group wanted to get the results out now so it can inform the environmental strategy discussions at the premiers' summit starting Wednesday in Niagara-on-the-Lake, Ont.

The key to the B.C. carbon tax shift's success, Elgie said, is that it while taxes went up on fossil fuel use, income taxes were reduced, so it discourages pollution while encouraging employment and investment.

Elgie said economists would predict the policy to work as it has.

"B.C. just had the guts to try it. And it's working."

Elgie admits that with only four years of data, he can't say for certain the changes in fossil fuel use in B.C. are entirely attributable to the carbon tax, but he's confident most of them are.

The rest of Canada's premiers should consider following B.C.'s lead, Elgie argues. Alberta and Quebec also have carbon taxes.

Even provinces where the impact of taxing carbon would be felt more keenly such as Ontario,which still relies in part on coal for electricity generation the benefits of offsetting that with income tax reductions would be a greater relief.