Commentary: Why a Carbon Tax Won’t Fly In Vermont

By Matt Cota

Vermont lawmakers are considering legislation that would add up to 89 cents to a gallon of gasoline, 58 cents to propane, and $1.02 to a gallon of heating oil and diesel fuel.

The tax, which would be passed on by retailers and paid by consumers, is designed to force Vermonters to reduce their consumption of heating and motor fuels.

Advocates of the carbon tax paint the policy as simple economics. Just increase the cost of something considered “bad,” and people will be motivated to do things considered “good,” such as purchase electric cars or take public transportation.

Consider the good created by the fuels targeted by the carbon tax. Vermont’s 8,000 miles of dirt roads are maintained with graders and dump trucks — and they require diesel fuel. Same for the plow trucks that clear the highways and for the buses that get our kids to school.

The tractors that farmers need to cultivate Vermont’s agriculture economy don’t run on electricity. The fuel that keeps our homes warm, our factories humming, and gets us to work is not bad — and it is not a sin. It is a necessity.

Yes, a carbon tax has been tried elsewhere — most notably in British Columbia. Required by law to be revenue neutral, the Canadian province has collected $5 billion in carbon taxes while reducing corporate and personal income taxes by $5.7 billion. In other words, for every $1 collected in carbon taxes, the government of British Columbia has given back $1.14.

That wouldn’t happen under the legislation proposed in Montpelier. One of the bills (H.412) takes 10 percent off the top and distributes it to organizations and businesses advocating for the tax. Another bill (H.395) takes 20 percent.

So, while British Columbia is returning $1.14 on every dollar spent, Montpelier is giving back 80 to 90 cents.

And that is if the money isn’t raided by lawmakers to avoid cuts to other government programs — which is almost certain to happen when a carbon tax quickly saps our ability to remain economically viable.

Three-quarters of Vermonters live outside of Chittenden County. We are mostly scattered in small towns, with half the population living near the border of New Hampshire, Massachusetts or New York.

Raising the cost of energy purchased in the our state will provide a significant economic advantage to our neighbors, convincing Vermonters to fill up over there and businesses to move out of here. At current prices, a $100 per-metric-ton carbon tax would increase the cost of heating and driving in Vermont by 50 percent relative to our neighboring states.

British Columbia, needless to say, is different. Boxed in by the Pacific Ocean, the Rocky Mountains, and an international border 1,200 miles long, half of the province’s 4.6 million people live in or around the city of Vancouver.

Setting aside the obvious economic and geographic differences between Vermont and British Columbia, consider what is already happening without regressive and punitive tax policies. While overall consumption of fossil fuels in the Canadian province has declined by 16 percent since the imposition of a carbon tax, similar declines are occurring here. Gasoline use in Vermont has declined by 10 percent since 2000, and oil heat is down 34 percent over the same time period.

Vermont, partly due to its small population and modest industrial base, has the lowest consumption of energy and lowest carbon dioxide emissions of any state in the U.S., according to the Department of Energy.

All sides of this debate agree that whatever we do to reduce the use of heating and motor fuels, it won’t have any impact on global climate change.

Yet a carbon tax will have very real negative repercussions on the Vermont economy. Raising the cost of living in our cold, rural state is not a solution to anything. It is economic ruin.

- Matt Cota is the Executive Director of the Vermont Fuel Dealers’ Association

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