British Columbia carbon tax review.

September 14, 2012

On September 14, 2012, Tax Executives Institute submitted the following comments to the British Columbia Ministry of Finance urging the Province to use proceeds from the tax to provide incentives for businesses that make investments in alternative fuel sources, methods for capturing emissions, or other "green" projects, and suggesting changes to make the tax more administrable. The comments, which took the form of a letter from TEI President Carita R. Twinem, were prepared under the aegis of TEI's Canadian Commodity Tax Committee, whose chair is Robert J. Smith of the McKesson Canada. Contributing substantially to the development of TEI's comments was Hugh Magill of Husky Energy, Inc. Daniel B. De Jong of the Institute's legal staff coordinated the development of the Institute's comments.

In its 2012 Budget, the Province of British Columbia announced its intention to undertake "a comprehensive review of the Carbon Tax and its impact on British Columbians. The review will cover all aspects of the carbon tax, including revenue neutrality, and will consider the impact on the competitiveness of B.C. businesses." The Ministry's June 27, 2012, News Release invited stakeholders to submit comments for consideration as the government crafts the 2013 Budget. To assist the Ministry in this effort, Tax Executives Institute recommends improvements to make the Carbon Tax more effective, efficient, and administrable to the benefit of both taxpayers and the Province.

Tax Executives Institute (TEI) is the preeminent association of in-house tax professionals worldwide. The Institute's 7,000 professionals manage the tax affairs of 3,000 of the leading companies across all industry sectors in North America, Europe, and Asia. Canadians constitute 10 percent of TEI's membership, with our Canadian members belonging to chapters in Vancouver, Calgary, Montreal, and Toronto, and they must contend daily with the planning and compliance aspects of Canada's (and British Columbia's) business tax laws. Many of our non-Canadian members work for companies with substantial activities in British Columbia and Canada generally. The comments set forth in this letter reflect the views of the Institute as a whole, but more particularly those of our Canadian constituency.

Carbon Tax Background

In 2008, British Columbia became the only jurisdiction in the Pacific Northwest to impose a carbon tax on most sources of energy other than hydro-electric. The B.C. tax, imposed on the volume of fuel purchased, is intended to encourage the reduction of greenhouse gas (GHG) emissions. On June 27, 2012, the Ministry of Environment released its report entitled "Making Progress on B.C.'s Climate Action Plan" (the Report) summarizing the Province's efforts to reduce the carbon footprint of B.C. residents and businesses. The report noted significant progress toward meeting the Province's GHG reduction targets and reviewed the effects of the Province's climate change policies (including the Carbon Tax) on each major sector of the provincial economy.

At the time the Carbon Tax was enacted...