Commentary: Here Comes the Carbon Tax (November, 2015)

by John McClaughryJohn McClaughry

The Climate Change Warriors are ramping up for a full scale effort in Montpelier two months from now. Not content with the decade long carnival of subsidies, taxes, mandates and sweetheart deals to enrich the renewable energy complex, they’re now going for the brass ring – making you pay the Carbon Tax.

The carbon tax campaign flies the flag of “Energy Independent Vermont”, a coalition of nine environmental lobby groups led by the Vermont Public Interest Research Group (VPIRG). Here’s the coalition’s argument: Our planet is threatened by the Al Gore-Obama-Sanders-Shumlin Heat Death, now called “climate change” (after “global warming” went on vacation the past 18 years.) The main cause of this coming catastrophe is “carbon dioxide pollution”. This “pollution” is primarily the result of people burning gasoline, diesel, heating oil, propane, and natural gas to stay warm, get to work, grow food, and earn a living. They must be stopped!

The coalition’s way to stop us from generating “carbon dioxide pollution” is to make those fossil fuels so expensive that we’ll have to find some other way to stay warm, get to work, grow food, and earn a living. How will we make those fuels more expensive? Impose a whopping “carbon pollution tax”!

The leading bill (H.412, revised), from Reps. David Deen (D-Westminster) and Mary Sullivan (D-Burlington), calls for starting with a $10 per metric ton tax on the carbon content of fossil fuels in fiscal year 2018. This tax rate would automatically increase by $10 a year for nine more years until it reached $100 per ton in 2027.

According to the REMI study, paid for by long time VPIRG benefactors David Blittersdorf and Matthew Rubin, in 2027 the carbon tax would raise about $500 million a year. Gasoline users would be paying another 88 cents per gallon just for the “carbon pollution tax”. Diesel, propane, heating oil and natural gas users would similarly pay 22-31% more for those fuels. The bill puts the tax on fuel distributors, so customers won’t see it – but they’ll pay it.

The “carbon pollution tax” advocates say, “You’ll pay the tax, but you’ll get it back!” Of course the “you” that will pay is not exactly the same “you” that will (maybe) get its tax dollars back.

First off, this new tax is not ‘revenue neutral” to taxpayers, because VPIRG insists that ten percent of the proceeds – $50 million (in 2027) – be skimmed off the top, into the Clean Energy Development Fund. The CEDF ran out of money when Gov. Shumlin’s favorite extortion target Vermont Yankee shut down. The bill resurrects it as the Vermont Energy Independence Fund (VEIF).

Much of the VEIF funds would be used for more low income housing weatherization, which is why six low-income organizations are supporting the bill. The remainder of the ten percent skim would be used to replace the solar investment tax credit which is scheduled to drop from 30% to 10% at the end of 2016, and without which Big Solar is dead in its tracks. We know this because James Moore, the former VPIRG energy lobbyist now employed by solar developer SunCommon, said so at a February conference.

After the ten percent skim, the remaining proceeds would be used to make up for reducing the Vermont sales and use tax rate from 6% to 5%, a refundable income tax credit, a monthly prebate program for the poor, and a per-employee rebate to employers. At least that’s the promise.

Whether there would even be any proceeds left to redistribute is very much in doubt. The state is running $100 million budget deficits almost every year, and is desperate for money. As the Energy Independent Vermont fact sheet of last November helpfully pointed out, “Based on legislative priorities, carbon tax revenue could of course also be used for other purposes.” Yes, probably so.

And what will Vermonters get for this scheme? Punishing taxes on every user of gasoline, diesel, heating oil, propane, and natural gas. No detectable effect whatever on “climate change”. Even more tax dollars channeled to subsidizing favored renewable energy projects. An exodus of businesses and taxpayers who can’t realistically abandon fossil fuel energy and can’t absorb the higher tax burden. Another big reason for Vermonters to shop somewhere else, despite the promised 5% sales tax.

All this is offset by the bragging rights for VPIRG delegates announcing to national environmental conferences that they were the first to heroically push through a “carbon pollution tax”.

Last month the Carbon Tax advocates finally appeared to recognize how their plan is likely to go over with Vermont voters not terrified by “climate change” – very poorly. Now they say they only want the legislature to pass the whole thing in 2016 (while Gov. Shumlin is still around to sign it), but make it take effect only after other states act.

A better idea would be for the House to vote the carbon tax bill down so overwhelmingly that no one will ever bring it up again, here or anywhere else.

— John McClaughry is vice president of the Ethan Allen institute.

{ 0 comments… add one now }

Leave a Comment

Previous post:

Next post:

About Us

The Ethan Allen Institute is Vermont’s free-market public policy research and education organization. Founded in 1993, we are one of fifty-plus similar but independent state-level, public policy organizations around the country which exchange ideas and information through the State Policy Network.

Latest News

VT Left Wing Media Bias Unmasks Itself

July 24, 2020 By Rob Roper Dave Gram was a long time reporter for the Associated Press, is currently the host of what’s billed on WDEV as a...

Using Guns for Self Defense – 3 Recent Examples

July 24, 2020 By John McClaughry  The Heritage Foundation’s Daily Signal last week published eleven news stories about citizens using a firearm to stop a crime. Here are...

FERC ruling on solar subsidies could help Vermont ratepayers

July 21, 2020 By John McClaughry Last Thursday, the Federal Energy Regulatory Commission finalized its updates to the Public Utility Regulatory Policies Act (PURPA), in what the majority...

The Moderate Left’s Stand for Free Speech

July 17, 2020 By David Flemming Harper’s Magazine, a long-running monthly magazine of literature, politics, culture, finance, and the arts, is hardly what you would call a ‘politically...

Trump’s Regulatory Bill of Rights

July 16, 2020 by John McClaughry “President Trump [last May] issued an executive order entitled  ‘Regulatory Relief to Support Economic Recovery.’ The executive order includes a regulatory bill...