McClaughry: Here comes the carbon tax again

By John McClaughry

The carbon tax warriors are promoting yet another version of “carbon pricing.” This new version is the “Transportation and Climate Initiative” (TCI), promoted in nine Northeastern states by the Georgetown (University Law School) Climate Center.

A Dec. 19 report by Mark Johnson in Vermont Digger described the TCI as a “pricing mechanism” that “caps the amount of greenhouse gas emissions that are allowable in particular industries or across the economy, and then creates a carbon market that allows entities to trade pollution allowances, benefiting those who cut pollution faster and imposing an increasing financial burden on heavy polluters.” Got that?

John McClaughry

John McClaughry is vice president of the Ethan Allen Institute.

Let me make it easier to understand.

According to carbon tax backers, the planet is imperiled by the Menace of Climate Change caused by humans recklessly burning fossil fuels to get to work and school, earn their paychecks, and heat their homes and businesses.

The carbon dioxide that that combustion emits is “carbon pollution” (despite being essential to plant and human life). Forty percent of the total emissions are produced by transportation – gasoline and diesel. This is intolerable.

The TCI coalition states will agree to limits on how much gasoline and diesel fuel the suppliers of gasoline and diesel fuel in those states can sell. The coalition will distribute funny money emission allowances to its nine governments – for free.

If using its products emits more carbon dioxide than the allowed cap, a supplier will have to buy funny money allowances from firms that are under their caps, and of course from the nine state governments that awarded themselves the allowances for free. The suppliers will add the cost of the allowances purchased to the prices they charge their customers.

The coalition governments will spend the proceeds from selling the allowances on whatever their legislatures approve. That could include subsidizing motor fuel for lower income and/or rural people to ease the burden of the higher fuel prices, subsidizing (further) the purchase of electric vehicles, or (least likely) paying for highway and bridge maintenance, toward which the electric vehicles pay … nothing.

Make no mistake: This cap-and-trade scheme is a carbon tax. The governments make motor fuel suppliers pay them for allowing them to sell each gallon of gasoline and diesel. The suppliers have no choice but to make their customers pay the extra cost. The motorists pay, and the governments collect.

Does this TCI cap-and-trade idea sound familiar? In August 2016 the Democratic gubernatorial candidate Sue Minter offered precisely this multi-state plan.

In the Oct. 6, 2016 debate, Minter tried to explain that a “carbon tax” meant “Vermont going it alone,” and that a regional cap-and-trade carbon pricing plan (like TCI) was not a carbon tax.

Republican candidate Phil Scott didn’t buy that. After listening to Minter’s tortured explanation, Scott said “it sure looks like she supports a carbon tax.” In that campaign, and since as governor, Scott has repeatedly pledged to veto any carbon tax bill that the legislature sends to his desk.

It will be another year before the TCI coalition finalizes its proposal for the nine-state agreement to impose a carbon tax on gasoline and diesel. Scott’s Deputy Natural Resources Secretary Peter Walke has been Scott’s representative to the TCI coalition design process. The governor needs to make it crystal clear to Walke that Vermont will not buy into any form of “carbon pricing” that is in fact a carbon tax, no matter how disguised.

Since there is no form of transportation “carbon pricing” that will not sock it to Vermont consumers through higher prices for gasoline and diesel, the governor should tell Walke to stop flying off to participate in TCI meetings convened to devise some way to put that scheme over on Vermont businesses and motorists.

John McClaughry is vice president of the Ethan Allen Institute.

Images courtesy of Wikimedia Commons/Alexander Migl and John McClaughry

11 thoughts on “McClaughry: Here comes the carbon tax again

  1. The Vermont Comprehensive Energy Plan, CEP, goal aims to “transform” the Vermont economy. It would require investments of about $33.3 billion, about $1 billion per year for 33 years, during the 2017 – 2050 period, per Vermont Energy Action Network 2015 Annual Report. The CEP could not be implemented without a very high carbon tax and other taxes, surcharges and fees of at least $970 million per year for 33 years.

  2. Carbon Tax Impact On A Typical Vermont Family, as reported on VTDigger:

    Any tax, including a carbon tax, passing through the hands of government suffers from “the sticky fingers syndrome”, 2 dollars go in about 1.5 dollars come out. The difference stays to feed the growing government bureaucracy.

    The key word missing in most discussions is UNILATERAL. VT’s government imposing on Vermonters a unilateral carbon tax is like shooting them in the feet.

    If the carbon tax were nationwide, I would support it.

    The carbon tax would:

    – Impose a $10/ton tax of carbon emitted in 2017, increasing to $100/ton in 2027.
    – Generate about $100 million in state revenue in 2019, about $520 million in 2027.
    – Be added to the fuel prices at gas stations and fuel oil/propane dealers.
    – Drivers should expect a tax increase of 9 c/gal of gasoline in 2018, increasing to about 89 cents in 2027.
    – Homeowners, schools, hospitals, businesses, etc., should expect a tax increase of 58 c/gal of propane and $1.02/gal of heating oil and diesel fuel in 2027.
    – A typical household (two wage earners, two cars, in a free-standing house) would pay additional taxes in 2027 of about:
    – Some of the carbon tax extortion would be at the pump, some when the monthly fuel bills arrive, and some as higher prices of OTHER goods and services.

    Driving = $0.89/gal x 2 x 12000 miles/y x 1/(30 miles/gal) = $712/y
    Heating = $1.02/gal x 800 gal/y = $816/y
    Total carbon tax in 2027 = $1528/y
    Sales tax reduction 5/6 x 1400 = $233/y
    Net tax increase = $1295/y

    – The hypocritical sop of reducing the sales tax from 6 to 5 percent would save that household about $233 in sales taxes, for a net loss of $1295 in 2027. That means such households, the backbone of the Vermont economy, would have about $1300/y less to make ends meet.
    – Many of these households have had stagnant or declining, spendable real incomes (after taxes, fees, surcharges; other recurring expenses, etc.), plus dealing with a near-zero, real-growth Vermont economy, since 2000.
    – With less real income, and higher real prices for goods and services, they also would have to make their own energy efficiency improvements.

  3. British Columbia, Canada, Carbon Tax:

    Proponents of the carbon tax point to it being a success in British Columbia, Canada. BC’s levy started at $9 per metric ton in 2008, and gradually increased to $27 per metric ton in 2012, or about 23 c/gallon; much less than Vermont. I would be in favor of the BC carbon tax, but only if it were:

    1) NOT used for government programs
    2) FULLY reimbursed
    3) Adopted all over the US

    BCs carbon tax was initially CLAIMED to be 100% reimbursed by means of reductions in personal and business income tax rates. However, that turned out NOT TO BE TRUE. The reimbursements were restricted bit by bit, to finance various government programs. See URLs.


  4. Follow the money and we will find out who profits from this tax on the backs of us all. Be interested to know. Money taken out of our pockets to accomplish what beyond some folks getting rich and a warm feeling??????

  5. Distributors of transportation fuels* in the nine states and D.C. would be required “to buy pollution permits [or allowances] for some of the carbon they distribute,” writes David Abel, environmental reporter for the Globe.

    * Compressed natural gas, propane, gasoline, diesel fuel, etc. Would aviation fuel be included?

    The TCI program could collect about $3.5 billion to invest in clean transportation investments,” writes Jack Kimmel, president of the Union of Concerned Scientists. ”

    At modest allowance prices, which distributors would add to prices at the pump, would cost the average driver $6 per month ($72/driver/y; much higher at immodest allowance prices.

    Fuel allowance revenues would be spent by the 10 jurisdictions for a variety of low carbon transportation programs that would be selected by each jurisdiction, “including public transit, carpooling and driverless car services, subsidies to accelerate the adoption of electric vehicles, and new bike lanes,” notes Abel. It looks like the sky is the limit.

    During the past few years, Vermont has proposed carbon taxes that are alleged to be partially “revenue neutral.” See Appendix.

    The TCI plan would be a carbon tax that would not be revenue neutral. The TCI carbon taxes would be inefficiently spent by politically influenced government entities on all sorts of transportation projects.

    The TCI plan, which is still being negotiated, could place a ceiling on the amount of carbon that could be emitted by transportation fuel distributors. The states would gradually lower that ceiling and reduce carbon emissions.

    “To comply, the distributors could:

    – Use more biofuels (if they would be abundantly available from soybeans and pond algae. See URLs), or
    – Buy credits from other distributors (how/where would other distributors acquire such credits?), or
    – Seek revenues in other markets (get out of the fuel distribution business?), such as recharging electric vehicles and hydrogen fuel vehicles.

    Because there are fewer than 100 wholesalers in the TCI region, the plan would not be difficult to administer.”

    Vtrans would see a major increase in its budget and staff to be paid for by TCI carbon taxes, and other fees and surcharges

    Vtrans has a long list of initiatives to restructure Vermont transportation

  6. The left is for this “Transportation and Climate Initiative” because they won’t have to put their name on the list of people who voted to tax the people.

  7. So Propdep is going to stick the “Pollutant” label on carbon, the essential basis of life as we know it. And scribble out “Tax” on a label unremovably pasted on what is patently a tax. “War is Peace” “Freedom is Slavery” “Ignorance is Strength” The Gruber inspired tactic for bamboozling the taxpaying suckers. The Progressive loathing for a market economy controlled by consumer demand is the epitome of Fascism, of centralized government control. Curious how their concern for the protection of wildlife vanished when the wind turbines went up. Disagree with them? You’ll be attacked by their media Thought Police. Attempt in public forum to speak truth about them? They have their own Fascist mob enforcers, the Antifa.

  8. Thank You John for continuing to battle the legislature. I am 100% with you on this. I am already forced to subsidize wealthy elites in their purchase of a fancy Tesla (the IRS tax credit). Now Vermont wants to pile on and force me to subsidize electric cars with a carbon tax. I am so out of this state as soon as I am capable.

  9. Yup, Vermonter’s let the Liberal DemocRATs take control of Montpelier, so hang on to
    your wallets or purses !!

    And it’s only January ……

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