Carbon Tax at the Pump in British Columbia and Quebec

Abstract

British Columbia and Quebec introduced a carbon tax on the sale of retail gasoline in July 2008 and October 2007, respectively. Our findings suggest that the BC carbon tax had a short-term negative effect on gasoline consumption per capita and led to an amplified behavioural response, but only initially. This amplified response might have been the consequence of a constant carbon tax after July 2012. In comparison, we find weak evidence that the QC carbon tax had a negative effect on gasoline consumption per capita and created an amplified behavioural response. Moreover, these impacts appeared only years after the introduction of the QC carbon tax. This delay might be explained by the increase in carbon cost incurred by QC fossil fuel distributors after their participation in the Western Climate Initiative Regional Carbon Market, which started in January 2015. We believe, however, that more research is necessary to reach more definitive conclusions about the effect of carbon taxes on gasoline consumption.