Drivers in BC now paying carbon tax

Wed Jul 2, 2008 7:24pm EDT
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VANCOUVER, British Columbia (Reuters) - North America's first comprehensive carbon tax is now in British Columbia, greeted with complaints that some gasoline stations have used the tax as cover to raise prices more than necessary.

The already-controversial tax, which took effect on Tuesday, added 2.34 cents per litre to the pump price, but some stations pushed up prices more than 4 cents, the Vancouver Sun reported on Wednesday.

British Columbia officials were not available for comment on the increases that pushed the price at some service stations to more than C$1.50 a litre, some of highest prices in Canada.

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

Supporters say the tax will encourage people to use energy more efficiently and is needed for British Columbia to meet its goal of reducing greenhouse gas emissions linked to global warming by 33 percent by 2020.

The government says the tax's goal is environmental not revenue-raising. It has been offset by cuts in income taxes, and residents last month received a C$100 rebate that officials hoped would put into energy-saving uses.

Critics have derided the fee as a "tax grab" that will hurt the economy and the poor, and say that recent increases in gasoline prices are already forcing people to reduce their energy consumption.

While drivers saw the immediate impact of the tax on Canada Day, other consumers will soon see it in their utility bills or bills for transportation and other services.

A spokeswoman for Terasen Gas said higher natural gas prices have encouraged 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.

Because the tax is based on carbon content, the utility hoped it might prompt drivers to switch from using gasoline or diesel to alternative fuels such natural gas for their vehicles.

(Reporting Allan Dowd, Editing by Peter Galloway)