The carbon tax debate

Portland State recently welcomed British Columbia’s Environment Minister Terry Lake and local business leaders to discuss the idea of a carbon tax in Oregon. Currently, there are four carbon-tax-related bills being considered by the Oregon Legislature, and the economic potential is drawing attention around the state. Some reports indicate that such legislation could generate $1 billion a year for the state of Oregon.

A carbon tax is a great idea in theory, and although I have reservations about the probability of its implementation, it has proven effective. To demonstrate, we need look no further than to our neighbors to the north—British Columbia.

Their carbon tax, introduced in 2008, has proven economically fruitful while also creating incentives for businesses and individuals to alter their activities in order to reduce their carbon footprints.

So how can a tax prove to be economically beneficial? By administering a tax reduction on businesses and individuals, which coincides with the introduction of the carbon tax. As Lake pointed out during his visit to PSU, reducing taxes while enacting the carbon tax renders it revenue-neutral, meaning that no additional money is taken. Your carbon tax dollars are simply being returned through reduction of other taxes.

The potential success of this system in Oregon is evidenced by the fact that British Columbia has returned $500 million more to taxpayers in tax reductions than it has raised in revenue. According to the Canadian government’s website, during the 2011/2012 fiscal year tax reductions are expected to return $192 million more to taxpayers than the government took in. One long-term result of this is that British Columbia has developed one of the lowest income tax rates in North America.

Keep in mind, though, that in British Columbia none of the revenue raised is used for government spending. This is where Oregon and the U.S. as a whole begin to differ.

For starters, Canada isn’t involved in a handful of “conflicts” across the globe that are hemorrhaging the nation’s resources. Oregon and the U.S. will most likely need to use the revenue raised for government spending, especially as budget cuts persist on both the national and state levels.

I simply can’t see the U.S. or Oregon being able to afford reducing other taxes in order to render a carbon tax revenue-neutral—the capital is too desperately needed. This is evidenced by the state’s desire to generate millions of dollars in revenue from the tax, not to be revenue-neutral. Whereas British Columbia’s citizens and businesses benefited from the absence of overall tax increases, the state of Oregon wishes to turn a profit directly.

But my major concern is that the financial burden of a carbon tax will be as unequal as any other in our current tax system. While it goes without saying that big businesses have massive carbon footprints, our devotion to the economy will impede our will to punish them for being the largest polluters.

There will be, without a doubt, efforts by large corporations—and “job creators” in Washington, D.C.—to fight for the exemption of those corporations. Therefore, in the event that a carbon tax is introduced, individual taxpayers will have to pay more than their fair share. It only makes sense that the biggest offenders are the last to be held accountable while the rest of the country chips in extra to cover for them.

We must implement a carbon tax if we are to change our perspective on pollution. Our country worships capitalism, and although hitting people’s wallets seems like a good idea in this regard, I can’t help but imagine the government will bend to the whims of big business, leaving the vast majority with the short stick.