Reuters | June 27, 2008
By Allan Dowd

VANCOUVER, British Columbia (Reuters) - Civic leader Scott Nelson says he is as worried as anyone about global warming, but that does not make him happy to be one of the first North Americans to pay a carbon tax to curb climate change.

Nelson, mayor of Williams Lake, British Columbia, says record high energy prices mean that the levy, for all its good intentions, could not come at a worst time for residents in his community, a lumber and ranching town about 525 km (340 miles) north of Vancouver.

"The last thing they need now is a tax on top of these soaring prices to add insult to injury," said Nelson, predicting that a taxpayer revolt will eventually scuttle the new tax, which takes effect on July 1.

Carbon taxes already exist in Europe. But the tax on fossil fuels will make the Pacific province of British Columbia the first North American jurisdiction to bring in a broad-based levy designed to cut emissions of the greenhouse gases that are blamed for global warming.

The provincial government unveiled the tax in February, calling it a key element in a pledge to cut greenhouse gas emissions by 33 percent by 2020.

The tax applies to nearly all fossil fuels, including gasoline and home heating fuel, starting at C$10 per tonne of carbon emissions in 2008 and increasing by C$5 a tonne annually for the next four years.

For drivers that will mean an additional 2.41 Canadian cents on a liter of gasoline (about 9.13 cents per U.S. gallon) starting on Tuesday. The current gas price in Vancouver, British Columbia's biggest city, is around C$1.40 a liter.

The government says the tax is designed to reduce carbon use, and not generate new revenue. It is cutting other taxes to offset the carbon tax take, and mailing a one-time C$100 rebate out to each British Columbia resident this week.

The opposition left-leaning New Democratic Party has launched an "axe the tax" campaign. The party says it would aim carbon taxes only at businesses and major industrial emitters not at individual consumers.

ENVIRONMENTALIST SAY STAY THE COURSE

Environmentalists acknowledge that the tax is coming at a difficult time, but they want the provincial government to stick with its plan as an example for others.

"I think reversing it would be a huge setback for effective government action on this issue, certainly in Canada and I perhaps in all of North America," said Matthew Bramley of the Pembina Institute, an environmental research group.

Canada's opposition federal Liberal Party is seeking a national carbon tax, but the plan has been panned by Prime Minister Stephen Harper whose Conservative Party this week launched attack ads against it.

The tax's supporters deny that the new tax will hurt the economy, and they say not dealing with the issue will cost the province far more in the long run as it grapples with the impact of climate change.

The provincial government estimates the tax will reduce carbon emissions by about three million tonnes a year, or the equivalent of the emissions of about 787,000 cars, as people reduce their use of carbon to save money.

But Nelson says rising energy prices are already doing what the taxes is intended to do by forcing people to cut energy use, and the carbon levy was an idea ahead of its time.

(Reporting Allan Dowd; editing by Janet Guttsman)