Why British Columbia’s Carbon Tax Is Not Applicable to America

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To persuade Americans that a carbon tax can reduce emissions without harming the economy, some proponents tout British Columbia’s (BC) carbon tax, enacted in May 2008. How relevant is the British Columbia model to U.S. climate and tax policy debates? In the U.S., many conservatives like the BC carbon tax for being revenue-neutral—that is, all revenue it brings in must be used to reduce other taxes. Yet, this argument is misleading for several reasons, which are outlined in this paper.

A carbon tax does not boost growth. It does not lower the tax burden, but merely shifts it around—and can even open the door to other tax increases. Moreover, due to its particular geography, British Columbia relies largely on hydro power and has an energy mix unlike that of most of the United States, except for the Pacific Northwest. Therefore, in most of the U.S., a carbon tax would be a tax on the majority of energy use.