by John McClaughry Not so long ago – 2015 – the carbon tax was all the rage among such organizations as VPIRG, Vermont Natural Resources Council, Conservation Law Foundation, and Vermont Businesses for Social Responsibility. Their argument was straightforward. Humankind’s penchant for making use of fossil fuels is (so they believe) inexorably driving the planet toward catastrophic warming by the end of this century. The hour is late! “The science is settled”! Anyone who harbors any doubt is an ignorant yahoo or a tool of the fossil fuel interests!
This must be stopped, and little Vermont must show the world The Way!
The Way, said the “Energy Independent Vermont” coalition, is for the Legislature to levy a steadily increasing new “carbon pollution tax” on gasoline, diesel fuel, heating oil, propane and natural gas. This tax ($500 million a year in the tenth year) is designed to price those fuels out of the market for most Vermonters, so they’ll find some other way to drive to work and heat their homes – or move.
Ninety percent of the $2.75 billion to be collected in the first 10 years of the carbon tax would subsidize people to pay the now-higher costs of the fuels, reducing the sales and use tax rate, and rebating funds to small businesses.
Ten percent of the proceeds would be skimmed off to support more government programs to weatherize homes and further subsidize renewable energy (notably the solar panel investment tax credit, due to phase out by 2022).
The coalition’s legislative vehicle for this tax attack on cheap energy was H.412. The 2016 House held hearings to allow the supporters of H.412 to make their case. VPIRG sent 55 interns out to canvass the state to build support. The backers predicted that in 2017 (not an election year) the carbon tax would sweep to enactment.
This plan had rough sailing. The new governor campaigned and won on a pledge to veto a carbon tax. Two sponsors of H.412 were unexpectedly unseated. A carbon tax referendum in Washington state failed 58-42.
So where is this year’s bill to levy a “carbon pollution tax”? Vanished without a trace.
In its place are four new House bills (with a lot fewer sponsors) to levy a carbon tax. Surprise! It’s no longer a “tax”! Now the tax has been disingenuously rechristened as a “fee”, because “tax” arouses primal instincts among the voters.
The coalition’s slogan is “tax cuts and climate action”. The four proposals, unlike last year’s H.412, are (supposedly) revenue neutral. That is, you’ll get a “tax cut” (if you’re lucky) to make up for being hammered with… a carbon “fee”.
Rep. Johanna Donovan (D-Burlington) would double the Earned Income Tax Credit, exempt smaller businesses from the corporate income tax, and reduce the lowest-bracket income tax rate for individuals. These “tax reforms” would be paid for with a carbon tax (H.528). She also added that the carbon tax revenue might be needed to cover reductions in Federal aid. Never mind that “revenue neutral” promise! (SEE Opinion: Tax Reform & Climate Action)
Rep. Sarah Copeland-Hanzas (D-Bradford) would drop the sales and use tax one percentage point a year for six years, to zero. That revenue loss ($396 million a year) would be replaced by a carbon tax.
Rep. Martin LaLonde (D-South Burlington) would replace the residential school property tax ($589 million a year) with a carbon tax.
Rep. Diana Gonzalez (P-Winooski) proposes to levy a carbon tax and pay all of the revenues out via quarterly dividend checks to individuals and businesses (H.531).
It’s pretty clear that the carbon tax backers are dangling one subsidy or tax reduction after another before the voters, then explaining that – no problem! - the state can recover the lost revenue by enacting a carbon “fee”.
Maybe we just ought to forget about taxing gasoline, diesel fuel, heating oil, propane and natural gas, and look for real tax reform that boosts our state’s economy.
John McClaughry is vice president of the Ethan Allen Institute (www.ethanallen.org)