[I]n the wake of record-setting fall temperatures, two Vermont lawmakers announced Wednesday that they will seek a tax on propane, natural gas, heating fuel and gas. The so-called carbon tax is designed to curb fossil use and carbon dioxide emissions that contribute to climate change.
Money collected from the tax would be used to significantly lower electricity rates for Vermonters.
Dubbed the Essex (Economy Strengthening Strategic Energy Exchange) Plan, the proposal would cut Vermonters’ electricity rates by an average of 27 percent, proponents said. The plan would offer monthly per-kilowatt rebates for all Vermonters, plus monthly rebates aimed at rural and low-income Vermonters.
The plan differs from previous Vermont carbon tax proposals in that it’s entirely revenue-neutral, said Sen. Chris Pearson, P/D-Chittenden. In other words, none of the tax revenue would be spent on weatherization, or on energy conservation and the like — all the revenue would reduce electric rates.
“Typically a price-on-carbon proposal increases gas prices so it discourages (gasoline) use,” Pearson said. “We’re doing that, but also encouraging an alternative.”
Pearson and Rep. Sarah Copeland Hanzas, D-Bradford, said Vermont would have the lowest power rates in New England if the carbon tax goes into effect.
The focus on using carbon tax revenues to directly reduce electric rates was spurred from criticism aimed previous carbon tax proposals, Copeland Hanzas said.
“We did that very intentionally,” she said. “We wanted to get the most economic bang for the buck with that, in getting Vermonters and Vermont businesses the lowest electric rates in the region. That’s how we get affordability for Vermonters and stability that doesn’t fluctuate like oil and gas does.”
The carbon tax bill would initially add 4 cents to a gallon of gasoline, over an eight-year period the rate would gradually increase to 32 cents a gallon.
If a rebate exceeds the amount of a utility bill, the ratepayer will receive a check.
Copeland Hanzas pitched the plan as an economic stimulus at an event Wednesday morning sponsored by Vermont Businesses for Social Responsibility.
Cheap power rates would draw industries to the state and spur growth for existing businesses, she said.
Matt Cota, executive director of the Vermont Fuel Dealers Association, said the plan would be a disaster economically for Vermont residents and would enrich New Hampshire gas station owners.
Greenhouse gas emissions are “of course” causing the Earth’s atmosphere to warm, Cota said, but even if Vermont outlaws fossil fuels entirely, the emissions reductions won’t make any meaningful difference.
“If you make something unaffordable, they’ll use less of it, no question,” Cota said, “but if you’re not solving that underlying problem, what’s the point of causing all that harm?”
Vermonters living in border towns will undoubtedly drive out of state to avoid paying a few extra cents on a gallon of gas, he said.
“Those bridges will be worn out with people going across the river for cheap gas and oil, but we won’t be able to fix those bridges because all of our tax money will be going to Concord, and it won’t be going to Montpelier,” Cota said.
Vermont residents pay 7 cents more per gallon in taxes than people who live in New Hampshire. New Yorkers pay 15 cents more than Vermonters, according to figures collected by the Washington, D.C.-based Tax Foundation.
Cota said an additional tax on gasoline would drive down the state’s gas tax revenues further and lead to crumbling roads and bridges.
Vermont drivers already pay a smaller proportion than drivers in almost any other state for road upkeep and construction, according to Tax Foundation figures. The state’s gas tax covers only 26 percent of road costs, placing Vermont drivers at 47th place in the country for infrastructure costs directly associated with driving.
The federal government currently pays for the majority of Vermont’s road costs, according to a recent funding report prepared by the Agency of Transportation.
Cota said the plan would in particular hurt low-income and rural Vermonters.
“This thing is dangerous,” he said.
Gov. Phil Scott agreed, saying at a news conference Thursday that the proposal would hurt Vermonters and Vermont businesses. Not everyone can afford a fancy electric car, Scott said.
Pearson disagreed. The Vermonters who use the most fossil fuels tend to be the wealthiest residents, he said, and they’ll in turn pay the most to do so. Low- and median-income Vermonters tend to own smaller vehicles and smaller homes, and by consuming less oil and gas they’re likely to see the greatest financial benefit as a result of the tax.