Fraser Forum

Sorry Minister de Jong, B.C.’s carbon tax is—and will continue to be—a significant tax increase on British Columbians

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B.C. Finance Minister Mike de Jong (pictured above) recently responded to our study that finds B.C.’s carbon tax is no longer revenue neutral—despite the B.C. government’s assurance to taxpayers that the carbon tax would be completely offset with new reductions to other taxes.

Here’s what the Ministry of Finance had to say:  "[W]e look at the entire tax system every year as part of the budget process, and it's reasonable that deciding to continue providing a tax cut is as legitimate a tax measure to include as an entirely new tax reduction."

Believe it or not, that’s actually what the government is doing. It’s taking tax credits that were implemented upwards of 15 years ago and claiming them as an offset to the carbon tax, when there was never any indication that these credits were going to appear as carbon tax offsets.

For example, consider the Film Incentive and Production Services tax credits (both of which give tax breaks to the film industry). These credits were first introduced in 1998. While they have been extended and enhanced multiple times, never at any point did the government express doing so for the purpose of the carbon tax.

When they were extended in 2009, again no mention was made of the carbon tax.

But then oddly enough, these credits begin appearing as carbon tax offsets in 2013/14—five years after their latest extension. This raises an important question: if the government extended these tax credits for the carbon tax, why did it wait five years to include them as offsets?

Once these and other similar pre-existing tax credits are properly removed from the government’s revenue neutral calculation, B.C. taxpayers endured a net tax increase of $226 million in 2013/14 and $151 million in 2014/15. If the available historical data are combined with the government’s projections to 2018/19, then the carbon tax is projected to result in a cumulative $865 million net tax increase on British Columbians over a six-year period.

British Columbians were told that the increased taxes they’d be forced to pay through the carbon tax would be offset with reductions in other taxes. The B.C. government has clearly broken that promise.

 

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