TalkClimateChange

My childhood was spent living and working on farms in Northern Canada, followed by living in some of the most populous cities in North America - so I can draw some contrasts between the urban and rural lifestyles.

Mark recently wrote here that over 50% of us world-wide now live in urban areas, and as a result environmental impacts are often associated with living the urban lifestyle. There are some interesting issues that arise regarding the “lifestyle” and other changes for urbanites that just do not fly when applied the rural areas.

The problem is that environmental activism does not do too well in rural communities that are much more self-sufficient, much more reliant on agricultural and resource industries, and where the population have a completely different set of circumstances from their city cousins. Why do solutions for the mitigation of climate change focus in on the urban dweller and in many cases penalize the rural population?

I will be looking at several of these cases over the coming weeks, starting with the BC carbon tax.

Case One: The BC Carbon Tax

In this first example, I will use the British Columbia Government’s new Carbon Tax on fossil fuels, a move met with much rejoicing in the urban centres of Vancouver and Victoria. Here are some of the highlights of this tax and how it works to penalize the rural population, ensuring that the pandering continues in urban centres, making sure that the left leaning socialists who ultimately elect the government stay happy.

First is the theory regarding the neutrality of the tax. This tax is claimed to be revenue neutral, but in reality is anything but, with significant short and long term effects on the overall budget of the province and the distribution of the share of tax burden. I won’t further complicate things by considering the urban taxation effect as well - this element is overlooked when people talk taxation and the effect of reducing the consumption of a taxed consumable, and will be addressed in another post.

Here is a link to the budget BC Budget 2008 - how the tax works is covered in the green coloured pages.

Here is a simple worksheet (BC Carbon Tax Simulation) that I’ve developed to calculate the net effect on urban and rural areas in BC as the tax is applied. It shows how the tax burden is shifted to rural areas based on consumption reductions in each area. This uses real taxation numbers and consumption figures based on fuel use and home heating costs (150 units in Urban Centres and 198 Units in Rural Centres ) but is not adjusted for population increases or other factors such as unemployment.

The usage rates were calculated using a percentage formula based on Gj (Gigajoules) of Natural Gas for home heating (56 Gj for Urban, 111Gj Rural) and average gasoline consumption based on driving habits from numerous sources. I weighted the difference slightly in favour of the Urban area  increasing their consumption due to urban sprawl and commuting distance increases.

The simulation applies the tax reduction in period to illustrate the shift of burden not the actual increase in taxes.

Now, I want everyone to be aware of how the tax works - you pay the higher starting income tax rate during the year as well as the Carbon Tax. This is out of pocket monthly expense which is now higher per tax payer (read real tax increase). Then, the following year the tax rate will be adjusted by applying the Carbon Tax revenue to the income tax collected and reversed out to arrive at the new common tax rate for the next year when the carbon tax increases again.

This simply means that you are out of pocket by the additional tax perpetually as the adjustments for neutrality are made based on the previous year’s revenue. The reductions in income tax are applied universally and not geographically or based on actual consumption per consumer, so as a rural inhabitant who uses fuel as a operational input and for general living expenses which are a direct result of a more severe climate in terms of colder temperatures you are shouldering much more of the burden because your opportunities for reductions are severely limited. 

Any taxes you pay are applied universally and not individually based on consumption, so your individual consumption does not effect your overall tax rate to arrive at a “revenue neutral” tax on a per person basis. The more you use the higher the tax burden and the greater the reduction for others. This is nothing but a tax increase that is adjusted higher and higher to maintain revenue and due to consumption the rural population will pay more.

Conclusions from Case One

Urbanites have much more opportunity to reduce reliance on fossil fuels, which I will discuss next time, and hence can severely effect the tax burden on rural communities. Environmentalists do not understand, nor does the Government, that they are penalizing the people who work in the industries that generate almost 80% of the wealth of a province that has a resource based economy. People in rural areas already resent the fact that they do not matter so much in the political decisions simply due to population density, adding more fuel to the resentment they feel towards urban centres. This is something that politicians should consider: This carbon tax is actually nothing more than a rural and cold tax.

This is important because it is a model that will be reproduced in other locations, all eyes are on BC to see if this Carbon Tax will produce the results intended so the world is watching to see if this model can work. If you have similar taxes in your region let me know!

More Information

Original Blog Post - The Climate Heretic