We’re encouraging innovation and conservation by introducing North America’s first revenue-neutral carbon tax. Here's what you need to know.
Lower Taxes for British Columbians
A revenue-neutral carbon tax will allow British Columbia to reduce taxes for individuals, families and businesses. Added to the government’s tax reductions since 2001, the changes in Balanced Budget 2008 will give British Columbians, by 2009, the lowest personal taxes in Canada on incomes up to $111,000.
That will make a real difference. For example, a family of four with two parents working earning $70,000 will save more than $2,000 in income tax compared to 2001. A young person working part-time and earning $20,000 a year will see a 75% reduction compared to 2001. And a senior couple with a combined income of $30,000 will now pay no provincial income tax at all.
Starting July 1, 2008, British Columbians will benefit from the following tax reductions, funded entirely by the new BC carbon tax:
- The bottom two personal income tax rates will be reduced for all British Columbians resulting in a tax cut of 2 per cent in 2008, rising to 5 per cent in 2009 on the first $70,000 in earnings – with further reductions expected in 2010;
- The general corporate income tax rate will be reduced to 11 per cent from 12 per cent – with further reductions planned to 10 per cent by 2011;
- The small business tax rate will be reduced to 3.5 per cent from 4.5 per cent – with further reductions planned to 2.5 per cent by 2011; and
- The new Climate Action Credit will provide lower-income British Columbians a payment of $100 per adult and $30 per child per year – increasing by 5 per cent in 2009 and possibly more in future years.
The $100 Climate Action Dividend
Who will receive a Climate Action Dividend?
The Climate Action Dividend is available to every adult and child who was a resident of British Columbia on December 31, 2007. This includes $100 to parents for each child who was under 18 years of age at the end of 2007.
New Tax Incentives in Balanced Budget 2008
Home Smart Savings:
- PST exemption for ENERGY STAR qualified residential refrigerators, clothes washers and freezers (expires March 31, 2010).
- PST exemption for energy efficient residential gas-fired water heaters with an energy factor of 0.80 or greater (expires December 31, 2009).
- PST exemption for insulation designed to prevent heat or cold loss from hot water tanks, hot and cold water pipes, and ductwork.
Green Transport:
- Exemption from passenger vehicle rental tax for rentals of eight hours or less.
- PST exemption for electric power-assisted two and three wheel cycles* and non-motorized adult-sized tricycles.
- PST reduction for electric motorcycles of 50% of the tax payable to a maximum of $1,000.*
- PST exemption for certain aerodynamic devices purchased for use on commercial motor vehicles.
Fuel Savings:
- PST reduction for certain conventional fuel efficient vehicles that meet the fuel efficiency criteria set out in the federal government’s ecoAuto rebate program. The tax reduction is $1,000, $1,500, or $2,000, and is based on fuel efficiency and vehicle type.*
- PST reduction for hydrogen fuel cell buses of 50% of the tax payable to a maximum of $10,000.*
- PST exemption for biodiesel fuel, including the portion of biodiesel fuel used in a furnace oil blend, when used for heating or other non- motive uses.
- PST applied to coal and coke, except when purchased for use in a residential dwelling unit.
- Biodiesel and ethanol classified as alternative motor fuels for all purposes and are exempt from tax.
Business Savings:
- PST exemption for production machinery and equipment for local governments for lower production and cogeneration.
- Eligible intellectual property expanded to include green-related patents (patents with World Patent Office classifications related to power generation using forces of nature such as wind, solar and tidal).
- Equity tax credit budget increased by $5 million per year, with $7.5 million of tax credit budget dedicated to clean technology.
Existing Tax Incentives Supporting Climate Action:
Home Smart Savings:
- PST exemptions for: ENERGY STAR qualified windows, doors and skylights.
- PST exemptions for insulation designed to prevent loss of heat from a building, including weather stripping and caulking and window insulating systems.
- PST exemptions for ENERGY STAR qualified home heating equipment, including oil-fired forced-air furnaces, boilers, air-source heat pumps, and ground-source heat pumps.
Energy Savings:
- PST exemptions for eligible wind powered, solar powered, or micro-hydro powered generating equipment, including solar photovoltaic collector panels (can also be used for heating/hot water).
- PST exemption for penstock equipment used for hydroelectric power generation.
- Property (School) tax exemption for specified improvements to eligible wind power or hydroelectric power projects.
Green Transport:
- PST reduction for: hybrid electric vehicles of 100% of the tax payable to a maximum of $2,000;
- PST reduction for eligible alternative fuel vehicles (e.g. operate on ethanol, natural gas or propane) of 50% of the tax payable to a maximum of $1,000.
- PST reduction for 50% of the tax payable to a maximum of $5,000 for alternative fuel shuttle buses and $10,000 for alternative fuel passenger buses.
- PST exemption for purchase of and charges to install kits to convert motor vehicles to operate on natural gas or propane, or to operate exclusively on electricity.
- PST refund on parts and labour to convert shuttle buses and passenger buses to operate as hybrid electric vehicles or to operate on HCNG (a blend of hydrogen and compressed natural gas).
- PST exemption for non-motorized two wheel bicycles.
Fuel Savings:
- Motor Fuel Tax exemptions for natural gas and alcohol-based fuels (blends of gasoline or diesel fuel and at least 85% ethanol or methanol) when purchased to propel a motor vehicle.
- Motor Fuel Tax exemptions for the ethanol portion, including denaturant, of an ethanol/gasoline or ethanol/diesel blend if the ethanol portion is not less than 5% or more than 25% of the volume of the blend.
- Motor Fuel Tax exemptions for biodiesel, including the biodiesel portion of any blend of biodiesel fuel and diesel fuel and pure biodiesel
- Motor Fuel Tax preferential tax rate (2.7¢/litre) for propane purchased for use in operating a motor vehicle or stationary engine.
