July 3, 2008

Drivers in British Columbia Now Paying Carbon Tax

A controversial carbon tax in the Canadian province of British Columbia is already fueling complaints that gasoline stations are raising prices and using the tax as a cover.

The already-controversial tax, which took effect on Tuesday, added 2.34 Canadian cents per liter to the pump price. The Vancouver Sun reported Wednesday that stations are cashing in on the change by pushing up prices an additional 4 cents.

British Columbia officials declined to comment on the increases that elevated prices to more than C$1.50 a liter, some of the highest prices in Canada.

The first comprehensive carbon use-based tax in North America, places a fee of C$10 per ton of carbon emissions on all fossil fuels. That will increase C$5 per ton a year for the next four years.

British Columbia is striving to meet its goal of reducing greenhouse gas emissions linked to global warming by 33 percent by 2020.  Tax supporters say the price hike will encourage energy efficiency.

Last month, taxpayers got a C$100 rebate that officials hoped would put into energy-saving uses. Government officials say the goal of the tax is to protect the environment- not to make money. The fuel hike has been offset by cuts in income taxes.

Carbon tax critics say the fee is a "tax grab", and predict it will hurt the economy and the poor. They believe recent increases in gasoline prices are already forcing people to reduce their energy consumption.

Many drivers saw the immediate impact of the tax on Tuesday, the Canada Day holiday. However, other consumers will be hit hardest in their utility bills or bills for transportation and other services.

A Terasen Gas spokeswoman said higher natural gas prices have prodded customers to use the fuel more efficiently in recent years, but she said the utility did not have data on the likely impact of the carbon tax on demand.