Revenue Neutral Carbon Tax (a.k.a Green Tax Switch)

An interesting policy innovation is taking place in British Columbia (Canada). A carbon tax has been introduced; the level of the tax is modest although increasing to 2012. The interesting part is how the tax works. A charge based on emmissions will be charge on the sale of all fossil fuels. The revenues raised will then be given back to the people in a manner that is both progressive and revenue neutral overall.

The tax incentives aimed at keeping the carbon tax “revenue neutral” will be dispersed as follows: the bottom two personal income tax rates will be cut by 2 per cent in 2008 and 5 per cent in 2009 on the first $70,000 in earnings; effective July 1, the corporate tax rate will drop to 11 per cent from 12 per cent; effective July 1, the small-business tax rate will be cut from 4.5 per cent to 3.5 per cent.

This is one of many kinds of green tax switch that bennefit both the poor and the environment.

Related:
UK Liberal Democratic Party: Green Tax Switch
Globe and Mail Article
Carbon Tax Background and Issues
Reuters

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