A carbon tax on gasoline, diesel, home heating fuel and propane will negatively impact Vermont’s already struggling economy. In just a few years from passage the impact is expected to be an additional $0.88 per gallon on gasoline, $1.02 on diesel and home heating fuel, and $0.58 per gallon of propane.
Increasing the cost of fuel will also likely increase property taxes as the state has not exempted municipalities or school districts from paying most fuel taxes. Municipalities and school districts operate vehicles and equipment such as school buses, police cars, fire trucks, plow trucks and excavators. These vehicles use significant amounts of fuel and energy costs are a large part of municipal and school budgets.
If the state carbon tax proposed last year were in fully implemented in fiscal year 2016 the City of Rutland would have budgeted about $805,000 for gasoline, diesel, fuel oil and propane, a 48% increase over the $543,000 budget. This represents $0.03 on the municipal tax rate or $45 per year tax increase for the average home. That cost would be about the same as the bond cost of a new City swimming pool.
The Rutland School district spent $106,000 on fuel oil, and $88,000 on gasoline and diesel. With the added tax these expenditures would also increase to 48% increase, the difference representing salary and benefits for approximately one classroom teacher.
If a carbon tax were imposed it would mean hard budgetary choices for towns and schools just a few years. This tax is very regressive, will be very harmful for working Vermonters, and will add more burdens through the town and school budgets. Increasing the cost of fuel will also mean our fuel assistance programs will help fewer needy Vermonters. There is no guarantee that tax revenues collected form such a tax won’t be used to shore up the state’s budget woes.
Nationally, progressives are pushing a multistate cap and trade bill that will have similar effects. Gubernatorial candidate Sue Minter supports such a plan, whereas Phil Scott has said he will veto a carbon tax.
– Wendy Wilton is treasurer of Rutland City and a member of the Ethan Allen Institute board of directors.