Environmental Taxes and Subsidies Tristan Cox

Environmental Taxes and Subsidies Known in government as Ecological Fiscal Reform Known in government as Ecological Fiscal Reform In simple terms, a redirection of income taxes In simple terms, a redirection of income taxes Green or environmental taxes counter the pursuit of lower prices by externalizing the true costs, ensuring the consumer or purchaser is aware of the costs of the environmental impacts Green or environmental taxes counter the pursuit of lower prices by externalizing the true costs, ensuring the consumer or purchaser is aware of the costs of the environmental impacts

Taxes and Subsidies Environmental taxes and subsidies are “a strategy that redirects a government’s taxation and expenditure programs to create an integrated set of incentives to support the shift to sustainable development” (National Round Table on the Environment and the Economy, 2002). Environmental taxes and subsidies are “a strategy that redirects a government’s taxation and expenditure programs to create an integrated set of incentives to support the shift to sustainable development” (National Round Table on the Environment and the Economy, 2002).

Importance of Tax and Subsidy Reform Canadians and their governments have become increasingly more aware of climate change and the surrounding environment Canadians and their governments have become increasingly more aware of climate change and the surrounding environment Taxes and subsidies are an economically feasible way to become more sustainable Taxes and subsidies are an economically feasible way to become more sustainable Taxes and subsidies are cheap and easy to implement and have massive impacts to coffers Taxes and subsidies are cheap and easy to implement and have massive impacts to coffers

Some Examples See the 2000 B.C Budget on Environmental Initiatives Part 1-Tax Shifts-Update and Status Report See the 2000 B.C Budget on Environmental Initiatives Part 1-Tax Shifts-Update and Status Report Ecological Gifts Program Ecological Gifts Program Fuel Taxes or Excise Taxes Fuel Taxes or Excise Taxes Tire recycling fees Tire recycling fees Levies and refunds on drink containers Levies and refunds on drink containers Plastic bag charges or taxes Plastic bag charges or taxes Oil taxes, which fund oil recycling programs Oil taxes, which fund oil recycling programs

Some Examples Tax breaks for “green” industry, such as mining and forestry Tax breaks for “green” industry, such as mining and forestry Carbon emission taxes Carbon emission taxes Tradable emissions permits Tradable emissions permits Energy use taxes (vehicle fuels, domestic power, household heating) Energy use taxes (vehicle fuels, domestic power, household heating) Energy Star program (which has since been cancelled) Energy Star program (which has since been cancelled)

Ecological Gifts Program Federal program open to all Canadians Federal program open to all Canadians Provides a way for Canadians with ecologically sensitive land to protect natural areas Provides a way for Canadians with ecologically sensitive land to protect natural areas Ecologically sensitive land or easements, covenants, and servitudes on such land are eligible for special tax assistance Ecologically sensitive land or easements, covenants, and servitudes on such land are eligible for special tax assistance

Ecological Gifts Program Provides charitable donations deductions for corporations Provides charitable donations deductions for corporations Provides donation tax credits for individuals Provides donation tax credits for individuals Favorable income tax treatments for gifts of ecologically sensitive land Favorable income tax treatments for gifts of ecologically sensitive land -this includes the provision of a tax credit or deduction to donors and a reduction in the taxable capital gains

Fuel Tax or Excise Tax Taxes on leaded, unleaded, aviation gasoline's, as well as diesel and aviation fuels Taxes on leaded, unleaded, aviation gasoline's, as well as diesel and aviation fuels Payable by the manufacturer or producer at the times the goods are delivered to the purchaser or at the time of delivery to the retail outlet Payable by the manufacturer or producer at the times the goods are delivered to the purchaser or at the time of delivery to the retail outlet Tends to favor a consumer pays attitude Tends to favor a consumer pays attitude

Fuel Taxes In B.C. 1975, 10 cents per gallon but it was reduced to 7 cents per gallon 1975, 10 cents per gallon but it was reduced to 7 cents per gallon 1978, 7 cents per gallon, but extended to aviation fuels 1978, 7 cents per gallon, but extended to aviation fuels Jan , rate converted to the equivalent metric rate of 1.5 cents/L Jan , rate converted to the equivalent metric rate of 1.5 cents/L Sept , 3.5 cents/L 1987, 5.5 cents/L 1988, 6.5 cents/L 1989, 7.5 cents/L 1990, 8.5 cents/L 1995 to present, 10 cents/L on gasoline and 4 cents/L on diesel and aviation fuel

Fuel Taxes around Canada B.C. is 15 cents/L in Vancouver and 13.5 cents/L in Victoria B.C. is 15 cents/L in Vancouver and 13.5 cents/L in Victoria Quebec is 15.2 cents/L Quebec is 15.2 cents/L Ontario is 14.7 cents/L Ontario is 14.7 cents/L Alberta is 9 cents/L Alberta is 9 cents/L Saskatchewan is 15 cents/L Saskatchewan is 15 cents/L Manitoba is 11.5 cents/L Manitoba is 11.5 cents/L New Brunswick is 20.7 cents/L Nova Scotia is 13.5 cents/L P.E.I is 13 cents/L Newfoundland is 16.5 cents/L Northwest Territories is 10.7 cents/L

When Should an Ecotax Kick In? An effective ecotax provides a tax credit on income taxes with certification of ecological improvements An effective ecotax provides a tax credit on income taxes with certification of ecological improvements The tax credit kicks in only if there is sole dependence on the cooperation of taxes The tax credit kicks in only if there is sole dependence on the cooperation of taxes

Questions?

Sources Backhaus, Jurgen (1998). When Should the Ecotax Kick In? A Cost and Choice Approach. Kyklos, 51, 565. Barrow, C.J. ( 1999). Environmental Management, Principles and Practices. Routledge, New York, B.C Budget Accessed October 24, 2007 from archive/budget00/reports/bgt2000_topicbox_c01.htm Beuregard-Tellier, F. (2006). Ecological Fiscal Reform. Parliamentary Information and Research Service, March 17, Careless, Ric (1997). To Save the Wild Earth. Raincoast Books, Vancouver, 1997 Catalogue of Federal, Provincial, and Territorial Taxes on Energy Consumption and Transportation. Accessed October 20, 2007 from subsidev/sdcat_1E.html Ecological Gifts Program-What are the tax benefits? Accessed on October 20, 2007 from 6C0F56D5-1 Mitchell, John. Accessed on October 20, 2007 from profile-almeck-e.html Torrence, K (1997). A Tax by any Other Name. Alberta Report/Newsmagazine, 24, 47.