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Surrey Mayor Dianne Watts takes a100-per-cent electric Nissan Leaf for a test drive after leaving a charging station at City Hall in Surrey last October.

Rafal Gerszak/The Globe and Mail

Local mayors are pushing the provincial government hard to start using carbon-tax revenue for transit and other greenhouse-gas-reducing projects instead of giving it all back to taxpayers in future years.

And the mayors, who have been lobbying the province as it reviews the carbon tax in preparation for its 2013 budget, say residents and businesses won't feel any pain if it is done right.

They say the carbon-tax rate and revenues go up significantly each year, and municipalities could use only the new revenue.

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"The differential is what we want," Surrey Mayor Dianne Watts said. "We've done the analysis and you're not having to raise taxes. You're just using that tranche."

Other mayors, such as Malcolm Brodie of Richmond and Langley's Peter Fassbender, echoed the sentiment that some revenues could be diverted to municipalities without people noticing it much.

"Yes, it might be tantamount to a small tax increase, but we don't think they'll see it that way," Mr. Brodie said.

When the province introduced a carbon tax on July 1, 2008, the rate was $10 a tonne. It has risen steadily, reaching $30 a tonne, which works out to a tax of almost seven cents a litre on gas for cars as of July 1 of this year.

Ms. Watts says that has meant Lower Mainland residents and businesses paid $154-million in taxes the first year, but $500-million in the 2011-12 fiscal year. The revenue is projected to go up to $611-million next year.

The province had promised to make the tax "revenue neutral."

The province compensated for the tax by reducing personal income taxes by 5 per cent and with corporate tax cuts that returned $500-million to businesses last year.

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Ms. Watts said the existing tax reductions could stay, but municipalities could start using the extra money for infrastructure that will help reduce environmental damage.

"For Surrey, the biggest way to reduce greenhouse gas is to create that integrated transit system here."

Vancouver Mayor Gregor Robertson, who in a news release this week supported extending the carbon tax and using it for local projects, said it makes more sense to use the carbon-tax money than to raise taxes elsewhere.

"Using carbon-tax revenue to fund clean transportation projects that reduce carbon pollution is a clear, direct approach that makes sense," said a statement from his office.

Metro Vancouver, made up of 22 municipalities in the region, says the province should also put some of the money into a climate-action fund.

In its submission to the province, the regional government gives examples of what could be done with its carbon-tax revenue.

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The list of things the $220-million in carbon taxes that came out of the Lower Mainland in 2010-2011 could pay for includes solar hot-water systems on 5,000 rooftops, 100 manure methane-collection systems for dairy operations, North Vancouver's district energy system, 30 kilometres of separated bike lanes and 1,000 electric vehicle-charging stations.

The province asked for submissions over the summer for its carbon-tax review.

The Canadian Taxpayers Federation asked that it be killed. The left-leaning Canadian Centre for Policy Alternatives wants it extended, increased and used more for climate-change projects.

Environment Minister Terry Lake said last week that B.C. will not ditch the carbon tax.

The Business Council of B.C. has said the province must recognize the tax's impact on energy-intensive companies and those that compete with non-carbon-taxed businesses.

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