When I pull up to the pumps in my small hometown on the coast of British Columbia, Canada, I pay more for a tank of gas than in California, my new home. Why? Because regardless of where gas prices hover at the moment, the B.C. government tops off every gallon with a 25-cent tax.
Complaining about gas prices is almost as ubiquitous as small talk about the weather, so it seems counterintuitive for politicians to hike costs up even further. Yet somehow the province’s Liberal party managed not only to do just that, but also to win an election centered on the issue in 2009. They did it by designing the tax in a way that benefits the province's robust middle class.
The B.C. carbon tax is built on a simple tenet of human behavior: When the price of something goes up, people will consume less of it. It actually applies to not just gasoline, but to all sources of atmospheric carbon, including natural gas and propane, and is based on how much carbon they emit. For example, since natural gas burns cleaner than gasoline, it is taxed at a lower rate. This ensures emissions are priced in proportion to their impact on the climate.
As a result, British Columbia’s per capita greenhouse gas emissions are now nearly 20 percent below the rest of Canada's. This put the province “within spitting distance” of its goal to reduce emissions 6 percent below 2007 levels by 2012 a year ahead of schedule, says Mary Polak, B.C.’s minister of the environment.
Sustainable Prosperity, a research and policy institute that measured the tax’s impacts, reported that the policy reduced fuel consumption seven times more than if the price of gas had naturally increased by the same amount due to market fluctuations. The tax drove consumption down not just by pushing gas prices up, but also by raising awareness about why we need to reduce reliance on fossil fuels.
All that happened in the span of just five years.