It all sounds so nice and green and fair. A revenue neutral carbon tax for British Columbia, the Best Place on Earth. The greens loved it. The first government in North America to give carbon taxing a shot. If it worked here, it would spread like wildfire across North America.
Well, the organic manure hit the windmill. It is fair to say that it was not a popular move. In a move that still seems rather surreal, the left leaning New Democratic Party borrowed a page from the neo-cons and starting an “Axe the Tax” campaign. The bad timing of the summer’s high gas prices certainly didn’t help. People were mad and looking for fight.
Now, with falling oil prices, there is concern that people will quickly return to their SUV lovin’ ways. Both for environmental, security and economic reasons, there is talk about gas or carbon taxes to discourage overuse of the precious black gold.
In going forward with such politically tricky ideas, it is important to learn from the BC experience. It would be easy enough to draw the conclusion that people just are not willing to except such taxes. This would be a mistake. The problem is not with the concept of a carbon tax, it is how it was implemented that caused the pain.
First of all, while it may have seemed like a good idea at the time, making the tax revenue neutral proved to be a bad idea. The anti-tax crowd, likely the ones the government was trying to bring onboard with revenue neutrality just simply does not like taxes, especially new ones, especially ones that they perceive as social engineering. On top of that, many just don’t trust government. They fully expect the money to be used for something and thus were not convinced.
People want solutions. If they feel they have no options to avoid paying the tax, they will feel like they are being unfairly targeted for actions they have little control over. They will fell like they are being punished for driving and they feel they have no alternatives, they will get mad.
Instead of returning the money from the carbon tax, a better idea would be to use it to fund transit improvements and other public measures that can help people reduce their carbon emissions. Five billion in transit improvements will get peoples attention. Construction companies, consultants and unions will be onboard. Drivers will feel that they have an option or at least will think that other drivers with leaving them with more space on the road. People waiting in the cold while packed trains and buses pass them by will certainly be excited about increased transit funding.
Using funding from a tax to improve public transit creates a lot of big winners who will provide the public support needed for the tax to be successful. A revenue neutral tax will create a lot of small winners who, given the small amount they receive, will not really care much one way or the other.
People don’t mind pay more taxes if they know the money will be used for something they want. If the last election was any indication, people clearly want money to be spent on rail and rapid transit. Voters in Seattle, Los Angles and Honolulu approved tens of billions of dollars in tax increases for rapid transit. California approved ten billion dollars for high-speed rail.
No one really gets that excited about receiving a hundred dollars in the mail. It is no big deal these days. Pretty much everyone will pay some of that in carbon tax so really no one really benefits that much.
Congestion charging has been a success in London because transit improvements where on the ground when the charges came into effect. Pricing without improvements is rather cruel. Without alternatives, it is just another tax that is unlikely to change people’s behavior.
Pooling our resources to create a better transportation system is a far more compelling idea than giving everybody a hundred bucks and hoping against all hope they can use this small amount of money to somehow provide themselves with a greener transportation solution.
Ironically, the province did announce a transit plan before the carbon tax was implemented. Which is all fine and good. Only problem is that they didn’t have a plan to fund it. Without such a plan, it is hard for people to take the plan that seriously especially when they are staring a carbon tax in the face. Only now is the province looking at revenue sources to fund the transit improvements. Up on the list are bright ideas like a cell phone tax (I don’t get it either) and of course gas taxes, congestion charges and road pricing.
So when governments are considering carbon taxes, road pricing and other similar measures, here are a few suggestions:
- Create many big winners
- Provide people with solutions so they have an option to avoid paying
- Clearly tie the tax or charge to the solutions
- Announce the solutions and the tax or charge at the same time
- Have solutions on the ground when the tax or charge starts
- As the solutions improve, increase the tax or charge
Labels: Carbon Tax, Climate Change, Congestion Pricing, Gas Tax, Good News, High Speed Rail, Transit