British Columbia is the first province to implement a comprehensive, revenue-neutral carbon tax, Finance Minister Carole Taylor announced Monday. Every dollar raised through the carbon tax will be returned through other tax cuts.

In the first three years, the carbon tax is estimated to generate $1.85 billion in revenue, which will be returned through: a reduction in the bottom two personal income tax rates ($784 million); the general corporate income tax rate will be reduced to 11% from 12%, with further reductions to 10% by 2011 ($415 million); the small business tax rate will be reduced to 3.5% from 4.5%, and to 2.5% by 2011), saving $255 million; and, a new Climate Action Credit will provide lower-income residents a payment of $100 per adult and $30 per child per year ($395 million).

This legislation is supplemented by an immediate Climate Action Dividend, $100 for every man, woman and child in BC, which will go out to residents of the province starting in late June.

“British Columbia is leading the way in addressing climate change, and the revenue-neutral carbon tax is another pioneering step forward for our province,” saidTaylor. “Each step we take to change our habits and behaviours, as individuals and as a community, will help leave a legacy that our children and grandchildren can be proud of.”

“Pricing carbon sends a clear message that there is a cost to the environment involved in emitting carbon,” said Taylor. “Leading economists and scientists agree that introducing a revenue-neutral carbon tax is the right thing for our province, today and for the future. We took time to design a model that protects low-income families and moves British Columbia to being one of the lowest-taxing provinces in Canada.”