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 proportio... Read more