Carbon Tax Proposal Gains Steam in Vermont

Could Vermont spark a carbon tax trend? State legislators say a recent flurry of carbon tax proposals are more “conversation starters” than a drive to change policy, but policy shifts have to start somewhere.

This year’s legislative session included a motion to launch a study to assess the viability of a statewide cap-and-trade program; another fee proposal to tax carbon in order to fund the state’s education system; a proposal to eliminate the state sales tax and replace with it a carbon fee on corporations; and a carbon tax that would pay a dividend to many of Vermont’s businesses and its 630,000 residents.

The carbon tax-and-dividend was proposed by state Rep. Diana Gonzalez, whose district lies in the northwest part of the state just south of the Canadian border. In an interview with a local business publication, she said:

“Climate change is real, and it’s scary, but there’s hope if we work together to solve it. The bills we introduced today are not bound by party labels. They could work singly or together, but they all move Vermont towards a more prosperous clean energy future.”

Gonzalez said her bill is modeled after a carbon tax-and-dividend proposal introduced by GOP elders, including George Shultz and James Baker. That idea, presented at the White House in February, recently scored the endorsement of James Hansen, who is widely regarded as the “father” of climate change science and awareness.

Another Vermont state representative, Martin LaLonde, introduced a similar carbon tax proposal during this year’s legislative session.

LaLonde’s bill would remove the burden of funding schools from property taxpayers and onto polluting companies. While many Vermonters are reliant on home heating oil during the state’s frigid winter months, LaLonde and other legislators point out that Donald Trump’s emphasis on revitalizing the coal industry will do nothing for their state.

State representatives supporting these proposals also argue carbon fees could accelerate the adoption of clean-energy technologies that could create jobs, lower energy bills and reduce carbon emissions.

And they say Trump’s shifting of budget and energy priorities requires Vermont to completely revamp its tax code. In addition, supporters of these carbon tax initiatives point out that a carbon fee implemented a decade ago, with the support of then-Gov. Jim Douglas, a Republican, helped reduce pollution while spurring economic growth.

Their proposals, however, would face stiff opposition from Vermont’s governor. Phil Scott, a Republican elected last November, has made it clear since his campaign that he opposes energy taxes or fees in any form.

And as these bills were recently introduced in the state capital of Montpelier, Scott again said the proposals would go nowhere and claimed they would make the cost of living more expensive for Vermonters. Scott’s environmental proposals, in contrast, are limited to a two-week sales tax holiday for energy-efficient products as well as hybrid and electric vehicles.

Furthermore, a free-market think tank based in Vermont, the Ethan Allen Institute, has slammed any carbon tax proposals as misleading and just another ploy to redistribute wealth.

Nevertheless, watch for two proposals to become central to policy debates over the next decade: a carbon tax as well as a universal basic income. As automation replaces more jobs and leaders realize the challenges and opportunities climate change present, we could very see a convergence of both ideas in the near future.

Image credit: Jim Bowen/Flickr