Revenue Neutral Carbon Tax Definition

10 fast facts about revenue neutral carbon fees.

Revenue neutral carbon tax definition. The tax was announced in february 2008 and was implemented in july 2008 at a rate of 10 per tonne of co2 rising in 5 annual increments to the current price of 30 tonne. Premier new democrat john horgan eliminated the notion of revenue neutrality altogether choosing instead to invest new carbon tax revenue to create jobs benefit communities. By designing the carbon tax as revenue neutral b c. It is designed as a revenue neutral tax meaning that all carbon tax proceeds collected by the government are returned in the form of income tax cuts and rebates.

The political appeal of a revenue neutral carbon tax is clear. All carbon tax revenue is recycled through tax reductions the government has a legal requirement to present an annual plan to the legislature demonstrating how all of the carbon tax revenue will be returned to taxpayers through tax reductions. That s on par with the amount raised by all other excise taxes. By jonathan marshall and robert archer ccl economics policy network the most sophisticated economic models available today tell a consistent story about the likely impacts of levying a national fee on fossil fuels.

The british columbia revenue neutral carbon tax is based on the following principles. The idea of a revenue neutral carbon tax even if it fits the accepted definition involves such incredible faith in government that it s difficult for persistently misled taxpayers to swallow. A carbon tax would drive investment in new technologies and spur innovation both by providing a financial incentive to reduce emissions and by giving markets a steady price signal. The congressional budget office estimated that a carbon tax starting at 20 per ton and increasing to 34 40 per ton in 10 years could have raised 1 2 trillion.

A carbon tax raises substantial revenue. This reduces the drag on the economy by enabling the government to reduce taxes on desirables such as income and capital and instead impose tax on an undesirable such as emissions.