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North America gets its first carbon tax

The Canadian province of British Columbia hopes to change consumer behavior – and raise revenue – by taxing virtually all fossil fuels, including gasoline and home-heating fuel.

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The plan is meant to be "revenue neutral," meaning that overall taxes won't climb. To compensate, corporate and personal income tax rates will drop, and low-income families will receive an annual tax credit of $100 per adult and $30 per child. To jump start the program, every resident will get a one-time payment of $100 this year. The Canadian Press reported:

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"[British Columbia] Premier Gordon Campbell said he won't try to pressure any other provinces to take action on climate change but he hopes B.C. serves as an example. He said by giving British Columbians tax breaks on things such as fuel-efficient cars and energy-efficient appliances, British Columbians are being given real choices on battling climate change. 'It'll drive investment in the economy,' Campbell said."

The new carbon tax is not seen as a panacea. It's expected to help cut B.C.'s greenhouse-gas emissions by about 5 percent by 2020, but that's well short of the government's goal of a 33 percent reduction. The Times Colonist in Victoria, B.C., quotes University of Victoria climatologist Andrew Weaver as saying that the tax will send an important message:

"To me, what's important is the actual signal to the market that carbon is going to have a price. And that price is going up, not down. And that, in itself, is enough to do a paradigm shift as to how we do stuff."

So far, the rest of Canada is not following British Columbia's lead. Ontario's strategy, for example, includes a commitment to shut down the province's coal-fired generating plants. United Press International quotes Ontario Premier Dalton McGuinty as saying:

"We're doing something differently here in Ontario that suits our economy and the direction that we're pursuing...."

Some federal officials in Canada are concerned that individual plans by provinces could be more costly and less efficient than a unified approach. The National Post reported:

"'(Canadians) don't want to pay more for cars, they don't want to pay more for other things because the governments can't get their act together and co-operate,' [Finance Minister Jim Flaherty] said."

That's essentially the argument the Bush administration has been using to block California and other states from regulating vehicle greenhouse gas emissions.