[G]o to the Republican State Committee website and you will be greeted by a “Stop the Carbon Tax Petition,” which reads as though it might be the last bastion against the designs of “Vermont Democrats and their radical friends.”
Wander the corridors of the Statehouse and it is hard to find a Republican who will not mention the carbon tax and point out that re-electing Republican Gov. Phil Scott could be the last chance to avoid the imposition of this dreaded levy.
The Republicans obviously see this as a winning issue, attracting both voters and campaign contributions. They may be right, but at the risk of being the grouch at their party, it should be noted that their struggle overlooks one detail: there ain’t gonna be no Vermont carbon tax. Not this year. Not next year. Not in the foreseeable future.
Even Rep. Sarah Copeland-Hanzas, D-Bradford, the chief sponsor of the carbon tax bill (H. 791), does not argue that it has any chance of passage. She still thinks it’s a good idea as a “market-based solution” to “the biggest challenge facing us over the next 50 years: climate change.” But she acknowledged that it’s an idea whose time seems not yet to have come.
At least not in any one state. Under other political circumstances, the idea’s time might be coming for the whole country right now. Polls show that most voters support taxing fossil fuels to help reduce global warming.
But imposing a tax in just one state presents both economic and political challenges. The Vermont bill would increase the cost of gasoline, already a nickel a gallon more expensive than in neighboring New Hampshire. In some of their statements, Republicans grossly exaggerate how much more expensive it would be. But even another few cents a gallon could convince more Vermonters to toodle across the Connecticut River to buy gas, making the tax a hard sell in Vermont.
This kind of complication helps explain why the relatively liberal, environmentalist, voters of Washington State defeated a carbon tax by referendum in 2016. It wasn’t close — 58-42 percent — and just last month the legislature there turned down another carbon tax bill.
In general, people do not like tax increases. The polling indicates that most Americans would accept higher fuel taxes to reduce global warming, but only if the burden is shared by all. Fewer people it seems, want their state to lead the way, fearing the competitive disadvantage that might result.
Besides, there is — or at least there appears to be — a consensus that government should not intrude too deeply into the private economy by, for example, using taxation as a tool of economic planning, as an incentive or disincentive to buy more of product A and less of product B.
Actually, there is no such consensus. People only object to the idea of using higher taxes. They have no problem with lower taxes, even if they create unwanted incentives and disincentives. Vermont, it turns out, has what might be called a counter-carbon tax system, policies that encourage people to burn more fossil fuels.
As Rep. Cynthia Browning, D-Arlington, pointed out, Vermont has several sales tax exemptions on fuel, which add up to more than $55 million a year in reduced state revenue, according to the 2017 Tax Expenditure Report of the Legislature’s Joint Fiscal Office.
Some of these exemptions make sense, Browning said. The biggest, for more than $48 million, is for residential home heating fuel.
“We don’t want to make it more expensive for Vermonters who have to heat their homes,” she said. “But the exemption applies to ski condominiums and vacation home McMansions. We’re trying to get people to use less fossil fuel, but we’re subsidizing them to use more.”
The other exemptions Browning listed are for fuels for boats, farm use, and off-road vehicles. None of these use the public roads.
“But they’re still polluting,” said Browning.
She doesn’t want to eliminate all these exemptions, or even limit them immediately. Charging the sales tax for home heating fuel, for instance, could be phased in over a period of several years, and “we could exempt primary homes. I question whether vacation homeowners need the kind of subsidy that the sales tax exemption provides.”
In some ways, Browning understates the case. For decades, the whole country has been subsidizing automobile traffic. The cost of building, maintaining, and operating roads and highways is tens of billions of dollars higher than total revenues from gas taxes, tolls and registration fees.
Somehow, even people who are devoted to “free market” economics rarely complain about these market-distorting subsidies. Nor do most of them oppose the tax breaks that subsidize homeowners and everyone who gets health insurance through his or her employer. Americans, it turns out, love being wards of the state as long as they can sustain the delusion that they are not.
Whether they are more deluded than people elsewhere is unknown. But it may be significant that the same day Cynthia Browning was discussing Vermont’s fuel tax exemption in the House Ways and Means Committee, elsewhere in the Statehouse a delegation from Quebec was explaining that province’s cap and trade system.
Like a carbon tax, a cap and trade plan seeks to cut greenhouse gas emissions by increasing the cost of fossil fuels. Jean-Yves Benoit, the director of Carbon Market Division at the Ministry of Environment, said that since the plan was adopted in 2013, the province’s economy has grown as its greenhouse gas emissions fell.
So far, he said, the cap and trade plan has been accepted by Quebecers. “No political party opposes the action,” he said. Asked why, he paused for a moment and said, “maybe because we’re French.”
Even allowing for M. Benoit’s apparent drollery, his answer raises an interesting question: in such matters, can mere English-speaking Americans be honest with themselves?
