Initiative 732 imposes a fee on fossil fuels based on the climate-warming carbon emitted when they’re burned. Economists of all political stripes agree that putting a price on carbon is absolutely essential to reducing greenhouse gas emissions. This is economics 101. When the price of something increases, people use less. British Columbia’s carbon fee reduced greenhouse gas emissions by 16 percent and the B.C. economy is doing as well, if not better, than Canada as a whole.
To mitigate the disproportionate effect on poor people, I-732 reduces the sales tax a full 1 percent and funds the Working Families Tax Rebate up to $1,500 a year for 460,000 low-income households. It also reduces the Business & Occupation tax on manufacturing to 0.001 percent of gross receipts, effectively eliminating the tax. This is the largest reform of Washington’s regressive tax structure in over 40 years.
All of the money I-732 raises is distributed back to the people. Predictions are that it will be within 0.5 percent of being revenue neutral; that is, it raises and spends no more money than is lost by reducing the sales and B&O taxes and funding the Working Families Tax Rebate.
At current rates, we must stop all burning of fossil fuels within about 37 years to have even a 50 percent chance of keeping global heating under the 2 degree limit pledged in the Paris climate agreement. While not perfect, I-732 is an essential step that can’t be put off any longer. Rejecting I-732 is truly letting the perfect be the enemy of the good. We simply can’t wait any longer.