By Craig McInnes
    The Vancouver Sun

    Thursday 01 May 2008

    Victoria, Canada - Ouch.

    Ouch, ouch.

    That, in short, pretty much sums up the reaction from across the province to the carbon tax announced by Finance Minister Carole Taylor in her budget in February and finally introduced as legislation this week.

    British Columbians are starting to read the fine print on the revenue-neutral guarantee, which promises to cut a dollar of other taxes for every dollar raised by the new carbon tax, and are discovering that neutral for the provincial treasury doesn't mean they won't be feeling any pain.

    What galls is the apparent inequity: Islanders complain about having to pay more for ferry service due to rising fuel costs. Northerners feel singled out because of longer winters and the distances they drive. Truckers complain they are being driven to the brink.

    It's the kind of reaction that usually sends politicians scurrying for their bunkers from which they can be expected to emerge with a basket full of loopholes to make everyone happy.

    They know voters who feel unfairly singled out for pain have long memories. But to the surprise of many, the legislation introduced by Taylor this week offered no such relief, nor could it without losing all credibility.

    The complaints didn't spark an ordinary political response because the Carbon Tax Act isn't an ordinary tax bill. It's not designed to raise money for the government, it is designed to change behaviour. It's supposed to hurt.

    The carbon tax is a fiscal trip to the woodshed for energy consumers. A painful experience that we're told is for our own good.

    The idea is that you can control how the tax affects you through the choices you make.

    Products and activities that are less harmful to the environment become less expensive and harmful choices cost more. Harm is defined as the release of carbon dioxide and other gases that scientists believe are fuelling destructive climate change.

    So you can keep on driving that SUV, but you will pay more for the privilege. Carbon taxes reward green living. Energy pigs get butchered.

    But here's the catch. Although we see the carbon taxes directly being applied to gas, home heating oil and other forms of fuel, we will feel its effects in almost every facet of life. You may not have any choice but to pay more.

    It won't just be ferry users; homeowners will face a bigger tax bite to pay for increased fuel costs paid by local governments.

    Consumers of all kinds of goods and services will pay more to cover the increased costs that businesses pays for heat, light and shipping.

    Those unhappy truckers will face a crunch in the short term, but eventually their higher costs will simply be passed on to consumers.

    How much more? We'll find out. The point is that this is what putting a price on carbon looks like. Generally speaking, the greater the energy content, not just of the item itself, but of everything that goes into to it, the more it will cost.

    The size of the carbon tax being introduced this year is more of a slight nudge than a boot in the backside. The strategy is to start low and increase it slowly over the next several years.

    But the skyrocketing price of oil has overtaken the tiny-steps approach. The carbon tax being imposed in July will be 2.4 cents a litre of gas. Since the tax was announced in February, the price of gas has jumped by about 10 times that much with the carbon tax still to come.

    That jump - with predictions that there may be even more pain ahead - should reinforce the message the carbon tax is designed to deliver.

    It will also hopelessly complicate any analysis of what effect, if any, the tax is having on the B.C. economy, or for that matter on the lives of British Columbians.

    Still, what matters more over time is the consistent message that manufacturers are starting to get, the message that consumers will be trying to beat the carbon tax - and new price shocks from soaring oil prices - by buying energy-efficient products.