British Columbia Premier Christy Clark spoke at the World Bank Group about the effectiveness of her Canadian province's carbon tax and the role of subnational governments in setting policies that can address climate change.
"We’ve had a pure carbon tax for seven years in BC. It covers 72 percent of emissions in the province, so it is very broad. It is now at about 30 dollars a tonne. So we have seen it operating for a long time.
I don't know if we are unique in the world, but we are proud of the fact that we have taken 100 percent of the revenues that we have collected through the carbon tax, which is over 6 billion dollars, and we have invested that plus some in tax cuts.
So, tax cuts for individuals, small business, corporate tax cuts, because we want to create a more competitive environment. And of course, what does that mean? It means more jobs, which is great for lowering unemployment, attaching more people to the work force.
And on the personal income tax side, we focused the tax cuts on people who are at the lowest end of the income spectrum. So about a million people in the province now of four and half don't pay any income taxes at all to the province. That’s been an investment we have been able to make because we had the revenue from the carbon tax.
The philosophy behind it is very simply put. It is: We want to tax the things we want to see less of, carbon for example. And we want to stop taxing things we want to see more of, which is wealth, which is investment, which is income. Those are the things we should be taxing less, and we should be taxing the behaviors we don't support more, and that is the recipe.
The reason our province has taken this on at a subnational level is because in many countries like Canada, many countries where subnational governments have a lot of taxation and economic levers at their disposal, we drive economic growth.
And it is the level of government that drives economic growth that most sensibly should be creating those carbon incentives or disincentives because they are inextricably linked.
So if you want to create economic, environmental incentives that are going to support a growing economy, it needs to be done by the same level of government. And that is why we found a space in this. And I think in many countries, I think this is true in the United States as well, certainly countries like India, where subnational governments have a lot of economic levers, it makes sense that subnational governments would lead this.
Each of us have unique local economies and we should be making the policy that works best to create economic growth."