Carbon leakage and tax exemptions

​This week there was more attention than usual on US politics as many watched the results of the US mid-term elections.

Closer to home in Washington State there also was a vote to implement a state carbon tax.

This vote was Initiative No. 1631 which proposed a carbon tax of $15/ton and was rejected with a majority 56% of roughly 2 million voters saying no.

This was the second time a Washington State carbon tax has been rejected by a majority of voters with the previous initiative being voted down in 2016.

Why does this matter to Canadians?

Here in BC, some of our industries compete with industries located in Washington State.

When an industry in a jurisdiction paying carbon taxes cannot compete with that same industry in another jurisdiction, not paying carbon taxes, there is a serious concern for economic harm and job losses.

This situation is called “carbon leakage”.

Carbon leakage is even referenced in the current BC NDP Provincial budget document.

Here is how “carbon leakage" is defined in that budget document:

“Industries that compete with industry in countries that may have low or no carbon price:

If Industry loses market share to more polluting competitors, known as carbon leakage, it affects our economy and does not reduce global greenhouse gas emissions.”

In Ottawa, the Trudeau Liberal Government has also acknowledged this same principle.

Liberal MP Sean Fraser, the Parliamentary Secretary to the Minister of Environment and Climate Change, recently admitted that when it comes to big industrial emitters in “trade-exposed industries”, the Liberal Government has recently softened carbon tax on big polluters because in the absence of carbon tax relief the carbon tax could potentially have jobs leave and it will do nothing for emissions.

In New Brunswick, the Trudeau Liberal Government has given a 95.5% percent exemption on carbon tax that applies to coal fired power.

Coal power is the second largest emitter of greenhouse gases in Atlantic Canada. The largest emitter is the Irving Oil refinery who imports oil from Countries that also do not have carbon taxes.

BC is also not immune from carbon tax exemptions.

As one example, despite the BC NDP Government signing onto the Trudeau national carbon tax, the new BC LNG investment will be exempt from the carbon tax increases called for in that agreement.

This is not an isolated incident where a polluting industry in BC has secured some form of carbon tax relief.

Why do I raise these points?

The challenge is that increasingly some of Canada’s largest polluters are being given exemptions from paying carbon tax.

These carbon tax exemptions seldom draw major national media headlines and many citizens are unaware they are occurring.

However for the average citizen and for small business owners there is no carbon tax relief.

Here in BC, more increases in carbon tax remain on the horizon.

My question this week is one of fairness.

With large scale polluters increasingly being given carbon tax relief, do you think it is fair that, here in BC, average citizens are being asked to pay more carbon tax?

I can be reached at Dan.Albas@parl.gc.ca or call toll free 1-800-665-8711.