Sunday, June 22, 2008

Climate Action Dividend vs. Climate Action Tax Credit

Back in February 2008 BC Finance Minister Carole Taylor introduced a Carbon Tax which will be implemented over the next few years. The plan is that this tax will be revenue neutral as both (provincial) corporate and personal tax rates are going to be lowered.

But there are two more carrots on the horizon. The first is the Climate Action Dividend. This is a $100 payment to every resident of BC and is not income dependent. Adult or child, employed or not, if you were a BC resident on December 31, 2007 you're supposed to get the Climate Action Dividend cheque this month.

The second is the Climate Action Tax Credit. This is a tax credit designed for low income individuals and families. It pays $100 per adult and $30 per child and is supposed to be available annually. If an individual's net income is over $30,000 or a family's is over $35,000 the tax credit is reduced by 2% of the amount of net income over the threshold level. If you qualify, the tax credit is paid quarterly like the GST credit.

So, we'll get the Dividend cheque but not the Tax Credit at our house.

And just what are we supposed to be doing with this money? Well, the idea is that we're supposed to spend it on something "green", like CFL bulbs. But it's really kind of like the US economic stimulus cheque in that people are going to use it for what they want as opposed to how the government suggests you spend it. One of the local TV stations was asking people on the street what they'll do with their dividend cheque and at least one person said it was going towards her Visa bill! Mine will almost certainly also go towards reducing credit card debt. A lot of people are saying they'll just fill their tank with gas and drive for free for a few days.

How about you? What will you do with your climate action dividend cheque? And, if you qualify for it, will the tax credit make a difference?

1 comment:

Dolly Iris said...

Wow, I didn't know about the tax credit. Thanks for posting that!