2-17-15 – John McClaughry’s EAI Carbon Tax Debate Opening Remarks

On February 16, John McClaughry (VP of EAI and John Goodrich (CEO of Weidmann) debated a team from VPIRG on the question of enacting a Carbon Tax in Vermont. The following is John McClaughry’s opening remarks for the debate. 

What’s the compelling reason for enacting a carbon tax? “Climate pollution”!

This is not the place for a full debate on climate science … but here’s what you are asked to believe.

You are asked to believe that human caused greenhouse gas emissions are causing catastrophic climate change.

You are asked to believe that curtailing fossil fuel combustion would somehow stabilize or reverse “climate change”,

You are asked to believe that forcing consumers to pay higher prices for gasoline, diesel, propane, heating oil, and natural gas – not to mention electricity — would depress fossil fuel combustion enough to make a detectable contribution to that global goal.

Maybe you believe all that. If so, you might conclude that a collectible global carbon tax would be a rational solution. But of course that’s out of the question.

You might then conclude that a US carbon tax, that replaced all those Federal regulatory schemes, would be less damaging. But that is also not going to happen. The carbon tax would land on top of all the other laws.

Now – would you then support a Vermont-only carbon tax, like British Columbia’s?

First off, recall that well over half of BC residents live six hundred miles from the Alberta border. They can’t drive across to buy things offered more cheaply without a carbon tax. It’s 18 miles from St. Johnsbury to Littleton. Even Gov. Shumlin noted this made this point when asked about Vermonters filling up more cheaply in New Hampshire.

The BC carbon tax is actually – and probably accidentally – revenue negative. It has resulted in net tax reductions totaling $260 million so far. No wonder it’s popular!

This Coalition proposal is not a BC type carbon tax.

For one thing, it proposes a tax rate at least two thirds higher than the BC rate, and preferably five times that rate.

Unlike BC’s, the Coalition proposal isn’t even revenue neutral. It skims off ten percent to finance subsidies for energy efficiency, weatherization and of course solar and wind.

Finally, you need to believe that the Coalition’s promises would actually be kept once your tax dollars start rolling into Montpelier.

Consider this. As we speak our state government is facing an enormous deficit of $110 million dollars.

The federal stimulus money is long gone.

Vermont’s two state retirement funds are $3.2 billion out of actuarial balance.

Revenues are regularly coming in below projections.

People are screaming for school property tax relief.

The governor is desperate for money. The money he promised last year to reduce the Medicaid cost shift – sorry, he had to take that back. Now he wants a new payroll tax to solve that same problem – $90 million a year that could also be used “to relieve budgetary pressures”.

The Commissioner of Finance and Management stated five months ago that, “I’m running out of one time pots to raid.”

Suppose our legislature, terrified by the Coalition’s lurid propaganda about extreme storms and climate pollution, votes for the Coalition’s carbon tax.

Do you think for a minute that even the 77% refund promise will be kept? No! Here’s what the Coalition’s fact sheet says on this point: “Based on legislative priorities, carbon tax revenue could of course be used for other purposes.” Thank you for your candor!

If making us pay a third more for gasoline, diesel, propane, heating oil and natural gas isn’t enough to do the trick, the Coalition will want more revenue to support their endless climate action agenda.

Vermont’s Constitution was written by practical people. They believed that energy, industry and opportunity would cause Vermonters to prosper if their legislature kept a tight fist on taxes. So, as Sen. Benning has often observed, they wrote this into the Vermont Bill of Rights:

“Previous to any law being made to raise a tax, the purpose for which it is to be raised ought to appear evident to the Legislature to be of more service to the community than the money would be if not collected.”

The “climate pollution” outcry is being used to hit Vermonters up for as much as $700 million a year by 2030, on the promise that they’ll get 90% of it back after the climate action interests get their protected portion, and “other budgetary pressures” are fended off.

That promise will assuredly not be kept. There will be little or no identifiable “service to the community”.

Our tax-forced emissions reductions won’t make the slightest bit of difference in combating global climate change, and they will have no detectable effect on Vermont’s environment.

The Coalition carbon tax won’t cripple “climate pollution”, but it will cripple our economy.

It will give politicians an irresistible opportunity to grab the revenue stream for other purposes.

And it fails the constitutional test for raising a new tax.

It’s an avoidable self inflicted wound, and now is the time to avoid it.

– John McClaughry is the founder and vice-president of the Ethan Allen Institute

{ 1 comment… read it below or add one }

KC Fantoni February 21, 2015 at 4:21 am

2-17-15 – John McClaughry’s EAI Carbon Tax Debate Opening Remarks

Well said!



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