Commentary: Goodbye to TCI

On December 21 Gov. Phil Scott bailed out of the proposed 12-state Transportation and Climate Initiative (TCI), at least for 2021.  Only three of the twelve hoped-for state participants have agreed to implement TCI (Massachusetts, Connecticut, and Rhode Island). Eight others, including Vermont, agree to keep on meeting, talking and negotiating, but the process is likely on life support. The twelfth state, New Hampshire, wants nothing to do with TCI.

TCI is a multistate agreement crafted by lawyers at the Georgetown Climate Center. It aims to reduce carbon dioxide emissions from the region’s transportation sector, which the backers believe are causing a “climate emergency”. It would impose a tax, disguised as an “allowance”, on every gallon of motor fuel sold throughout the region. The tax would start at 5 to 17 cents per gallon, and increase for ten years until motorists and businesses use less motor fuel, and therefore produce fewer emissions, to conform to TCI’s ever more stringent requirements.

Through his spokesperson Rebecca Kelley Gov. Scott announced that his administration “has always been clear that working to address transportation emissions that impact climate change is critical.”  (Yes, critical, absolutely, but…)  But Gov. Scott has concerns about “increasing costs on Vermonters, especially those in rural areas who must travel for work.” She went on to promise that the administration would keep on meeting, talking and negotiating with the other states until they come up with a scheme that won’t “increase costs on Vermonters, especially those in rural areas who must travel for work.”

Let’s be honest: there is no scheme to drive up the cost of motor fuel that will not increase costs on Vermonters, those in rural areas and everywhere else.

The coalition of enviro groups ardently promoting the TCI  rushed to put out  a release praising TCI as “a cap and invest program designed to reduce pollution from the carbon-intensive transportation sector and use revenues raised to invest in equitable solutions that serve the unique transportation needs of different states.”

It even argued that TCI would put “more dollars in the pockets of Vermont’s low-income, rural, immigrant and BIPOC communities.” Johanna Miller, the VNRC lobbyist now on the Climate Council, added that TCI revenues would “finance solutions that in particular serve lower-income and more vulnerable Vermonters well.” 

It takes real imagination, or duplicity, to explain how a seventeen cents per gallon tax increase on gas and on-road diesel will finance an equitable solution to the problem of having to pay seventeen cents more per gallon of motor fuel.

The most newsworthy revelation in the VPIRG news release is the admission, that “with regional participation from Massachusetts, Connecticut and Rhode Island, because of market dynamics, if Vermont does not participate in the program Vermonters will likely pay TCI’s compliance costs [the “allowance” taxes] without receiving any of the benefits.”

That’s absolutely true. In plain English, if Vermont opts to remain out of TCI, like New Hampshire, the State treasury won’t collect any payments back from TCI. Fair enough. But TCI will still impose its allowance tax on every gallon of motor fuel sold at the big fuel terminal in Springfield, MA where many Vermont distributors buy motor fuel destined for Vermont gas stations and motorists. The State won’t get any of the revenue that the TCI governing body promises to distribute, but Vermont consumers will still pay the tax and TCI will hand out the money to somebody else.

ANR’s TCI liaison responds that the fuel seller at the Springfield terminal might because of “market dynamics” decide not to add the allowance tax cost to fuel destined for Vermonters. The seller might charge its customers in other states more, until they start asking why they are paying more when the seller is selling at a discount to Vermont distributors. Or maybe the seller will explain to its shareholders that the Vermonters’ discount was paid for by reducing their profits. The “market dynamics” argument, to put it most generously, requires a willing suspension of disbelief.

TCI is complicated and ingenious. It’s designed to raise billions of dollars in motor fuel taxes from purchasers even in states that decline to sign on to TCI, in a way they can’t discern. VPIRG and its allies have let that cat out of the bag, and they will surely regret having admitted it.

Gov. Scott is not likely to put forth detailed objections to TCI. He’ll raise a few questions, point to pandemic uncertainty, and pay his customary homage to climate change orthodoxy. But he clearly sees that this is just one more elaborately concealed carbon tax. He knows what that will to do families and Covid- stressed businesses, he has opposed that for four years, and he won’t buy it. Good for him.

John McClaughry is vice president of the Ethan Allen Institute.


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