Editor’s note: This commentary is by John McClaughry, the vice president of the Ethan Allen Institute.
Single payer health care taxes are gone – for now – but there’s another hot idea in Montpelier for a new tax – the carbon tax. It’s being promoted by Energy Independent Vermont, a coalition led by the Vermont Public Interest Research Group (VPIRG), the Vermont Natural Resources Council, and the Conservation Law Foundation.
Why, you might ask, do already overtaxed Vermonters need a new tax on natural gas, heating oil, propane, gasoline and diesel fuel? The coalition spokespersons are unanimous on this. We must defeat “climate pollution – the biggest environmental challenge of our generation”! They profess to believe – and some may actually believe – that human-caused emissions of carbon dioxide are giving us “super storms and extreme weather events.”
To such people the obvious remedy for “climate pollution” is to make carbon combustion illegal and put those evil polluters in jail. That presents some problems, so the coalition is pushing its fallback position: have the government tax carbon fuels so people can’t afford to use them anymore.
Their argument: When the tax increases cause the price of natural gas, heating oil, propane, gasoline, and diesel fuel to rise enough, people will spend more on energy efficiency and conservation. They will replace home heating gas and oil with electric heat pumps. They will turn to electric vehicles to replace gasoline and diesel-fueled vehicles.
Here’s the way the carbon tax will work. The state will tax all of these fuels at some convenient point in their supply chains. The proposal exempts electricity because the Regional Greenhouse Gas Initiative makes consumers in eight other Northeastern states send money to Vermont because they have carbon-based electricity generation and we don’t.
The study commissioned by VPIRG assesses carbon tax rates of $50, $100 or $150 per ton, phased in over several years. At the lowest ($50) rate, VPIRG expects the new tax to produce $35 million in 2016 and $250 million in year 2030. At the $150 rate, the take would be $700 million a year by 2030. The model promises increases in jobs, disposable incomes, and gross state product.
What will become of these enormous tax revenues – assuming desperate Legislatures refrain from grabbing them to bail out the state’s recurring General Fund deficits, its $3 billion underfunded retirement funds, and the costs of a successor program to Gov. Shumlin’s failed state takeover of health care?
In plain English, the renewable industrial complex will cash in to the tune of $3.5 million the first year (at the $50 rate) to as much as an astounding $70 million 15 years out (at the $150 rate).
The advocates say the state will redistribute the carbon tax revenues through tax cuts and rebates to people, governments, organizations and corporations to compensate them for the higher energy costs caused by the carbon tax. An extra share will go to the lower income quintiles (“the poor”). This redistribution feature, plus millions more in weatherization subsidies, doubtless accounts for the support of the five low-income organizations in the coalition.
The carbon tax will be a net tax increase. Ninety percent of the carbon tax revenues will (hopefully) be returned to the lucky recipients. Ten percent of the revenues will be skimmed off to pay for “investments in energy efficiency, renewable energy, and other clean alternatives to fossil fuels.”
In plain English, the renewable industrial complex will cash in to the tune of $3.5 million the first year (at the $50 rate) to as much as an astounding $70 million 15 years out (at the $150 rate).
This should come as no surprise, since the two leading figures of the renewable industrial complex underwrote the VPIRG report: David Blittersdorf (AllEarth Renewables) and Matthew Rubin (Renewable Energy Vermont).
The era of nickel and dime funding for the Clean Energy Development (Subsidy) Fund, from which Blittersdorf was excused as a director in 2011 for blatant conflict of interest, will be over. The carbon tax will dramatically refill that renewable energy subsidy trough.
Vermonters can look forward to today’s $3/gallon gasoline costing as much as $4.35, and paying a third more for natural gas, propane, heating fuel and diesel. This will happen if the people snooze while VPIRG, VNRC, CLF, Blittersdorf, Rubin and the other conspirators bulldoze this measure through a Legislature whose majorities have been sufficiently terrified by “climate pollution” propaganda to lay another major new tax on their constituents.
On the other hand, the designated victims might have an unlikely ally — Peter Shumlin, not long ago known as “the senator from VPIRG.” He recently observed that “if you have a high carbon tax in a gas station on this side of the [Connecticut River] bridge and you have no carbon tax on the other side of the bridge, it’s pretty clear where you’re going to fill up your tank.” (Of course you wouldn’t have that option with natural gas home service or a heating oil delivery.)
A week ago the governor abandoned his cherished single payer health care plan because it could not be financed by “tax rates that I can responsibly support or urge the Legislature to pass.” He needs to add the carbon tax to that list.
