Commentary: ESSEX Carbon Tax Carnage

By David Flemming

A few months ago, Paul Burns of VPIRG proclaimed that “the ESSEX Plan (would make) the wealthiest and large corporations (to) pay their fair share as Vermont’s biggest polluters– while low- to moderate-income Vermonters would save money.”

Call me skeptical, but a plan to tax everyday Vermonters in order to subsidize large companies like Ben & Jerry’s doesn’t seem likely to save Vermonters much money.

Burns continues, “the ESSEX Plan proposes lowering electricity bills by 25-30 percent for residential ratepayers and businesses. Rural and low-income Vermonters would receive additional rebates. This would give Vermonters who want to transition to cleaner heating and transportation options a financial incentive to do so.”

While ESSEX does offer low income and rural rebates, these rebates are not nearly enough to offset the increased tax expenses and overhead costs for all but the wealthiest of Vermonters, who can afford to buy electric vehicles, solar arrays, electric heat pumps, etc. This policy is “revenue neutral” for no one. It is revenue positive for the ‘greenest few’ and revenue negative for most Vermonters, if a recent fossil fuel survey is any indication.

The Ethan Allen Institute surveyed over 80 Vermont households about their fossil fuel usage and electricity usage in order to create “profiles” representing how this tax/rebate scheme would impact real people in the real world.

We selected six real low and middle income households  from the 80 original households. These six reflect a diverse range of family situations spread across the geography of the state. All rely on fossil fuels for heat, which is the case for 3 in 4 Vermont households. None could afford to invest in an electric vehicle or expensive renewable energy options.

Since 2000, Vermont has provided millions of dollars to Vermonters to “transition to cleaner heating and transportation” through Efficiency Vermont. By now, the Vermonters who are most financially able to purchase renewable energy have already done so. Realizing this, Burns is asking Vermonters to combine the “financial incentives” from Efficiency Vermont with  “financial threats” from the ESSEX Plan. If Vermonters don’t adopt renewable energy, they will pay the price.

Of the six households, four of these households received the rural rebate or the low income rebates, according to the numbers provided when the ESSEX Plan was introduced. Two received both rebates. In the end however, the rebates mattered little. The carbon tax (and the ESSEX Plan is a carbon tax) ate up all of the rebates, and then some.

Bob Yandow (a pseudonym) is a single, low-income retiree living in rural Orange County. Bob fared the best out of our six examples, but even he would still lose an annual net of nearly $70 by 2026, when the ESSEX Carbon Tax would be fully phased in. Mike Evans, a house-rich, income-poor resident of Windham county who lives on $21,000 a year, would have to pay a whopping $1,250 in taxes by 2026. Sure, Mike would receive $570 in lower electric rates, a rural rebate and a low-income rebate. Unfortunately, he would still end up paying $680 on net.

ESSEX targets Vermonters who are least able to change their spending habits. The only ones who stand able to avoid the fossil fuel tax are the wealthy, who might be able to escape this carbon carnage in an electric car. I would like to think the best about those who embrace ESSEX. At some point however, ignorance is no excuse for bad policy. If the ESSEX Carbon Tax is passed, its advocates will struggle to explain why they are siphoning away money from Vermonters’ budgets. We should reject ESSEX before it can do real damage to Vermont.

David Flemming is a policy analyst at the Ethan Allen Institute

{ 4 comments… read them below or add one }

Blaze Carpenter October 24, 2018 at 10:24 pm

How would any of this apply to renters with landlords that dont do this.

Reply

Ted Robinson November 1, 2018 at 10:59 pm

Essex Carbon Tax? Count me out……………………….of Vermont!

Reply

Jill Lowrey November 2, 2018 at 3:23 pm

David,
Can you please publish this information in our local papers? Or if they will not let you please forward me the link and I will post on our local FPF. Thanks for keeping us informed!

Reply

Rob November 2, 2018 at 4:00 pm

Hi Jill, here is the link. I will also send you a quick email to give you a more in depth answer.

http://ethanallen.org/essex-carbon-tax-carnage/

Reply

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The Ethan Allen Institute is Vermont’s free-market public policy research and education organization. Founded in 1993, we are one of fifty-plus similar but independent state-level, public policy organizations around the country which exchange ideas and information through the State Policy Network.
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