Voters could decide this fall on a measure that would lower the state’s sales tax, but would add a carbon tax on fossil fuel businesses.

Voters could decide this fall on a measure that would lower the state’s sales tax, but would add a carbon tax on fossil fuel businesses.

Pollution measure calls for paying more at pump, less at register

  • By Deanna Duff For The Herald Business Journal
  • Friday, February 5, 2016 4:02pm
  • Business

Many in Washington believe that it’s time to clear the air regarding climate change.

Now environmental groups are currently proposing different approaches to do that. As the 2016 ballot season nears, voters may face multiple options of how best to tackle the challenge.

Non-partisan group Carbon Washington organized Initiative 732. Modeled after a carbon tax British Columbia implemented in 2008, its main points include instituting a $25-per-metric ton tax on carbon emissions from fossil fuels. It would also reduce the state sales tax from 6.5 percent to 5.5 percent and effectively eliminate Washington’s Business &Occupation tax.

A rebate program would be offered to 400,000 low-income households.

Carbon Washington formed in 2009. According to Yoram Bauman, founder and co-chair of Carbon Washington, the group has long been interested in “taking a swing at the ball” in terms of backing an initiative. I-732 has more than 350,000 citizen signatures. It is an initiative to the Legislature, which means it is being considered by lawmakers who can then enact it into law or place it on the 2016 ballot.

“Washington state contributes 2 percent or less to national emissions, but it’s arguably an ethical responsibility for us to do our part,” Bauman says. “We can be a model for the nation and world in terms of showing a path forward that works for the economy and environment.”

Proponents contend that I-732 is revenue neutral. The tax increase would be negated by tax cuts. Bauman estimates it will generate $2 billion in carbon taxes annually.

The measure would raise gasoline prices about 25 cents per gallon and coal-fired electricity by about 2.5 cents per kilowatt-hour. Natural gas is cleaner, so it would only increase by about 1.2 cents per kilowatt-hour. Hydro, wind and solar wouldn’t pay the tax since they’re renewables. The producers of the fossil fules would be charged the increase and they would then pass it along to consumers.

“In broad strokes, what we find is that the way our policy works means most households pay a few hundred dollars more for fossil fuels (yearly) and a few hundred less in taxes” Bauman says.

The point of revenue neutrality has generated debate. In 2015, a nonpartisan analysis was requested by the then chairman of the House Finance Committee. Using estimates tax return data and information from Carbon Washington’s website, it estimated a $675.4 million cut to the state budget over four years.

“We think there are some significant problems with the analysis,” Bauman says. “We continue to think I-732 is revenue neutral and possibly slightly revenue positive. We have to wait for the official fiscal note from the Office of Financial Management.”

Budget issues are of primary importance to I-732 opponents. The Alliance for Jobs and Clean Energy is voicing concerns. Formed in January 2015, the coalition is comprised of more than 150 organizations also dedicated to addressing climate change.

“At a time when the state needs to be investing in education, healthcare and other priorities, we have concerns about the revenue impacts,” says Gregg Small, executive director of Climate Solutions, a founding member of the alliance and chair of the organization’s board of governors. “We feel that climate change shouldn’t add to the burden and doesn’t have to.”

The alliance also believes that I-732 fails to invest in clean energy solutions on a larger and more personal scale.

“From a policy perspective for the alliance, we believe in limiting carbon pollution, a fee on carbon pollution and then investing that money to generate clean energy solutions,” Small says. “We want protections for the most impacted and a just transition for fossil fuel workers into cleaner forms of energy.”

Small said would prefer an effort that would rally the state’s entire community advocating to address climate change.

According to Small, the alliance worked closely with Carbon Washington during December 2015 to discuss unifying the two groups’ efforts behind one ballot measure. That did not come to pass.

“We describe it as being on the same team, but we’re not on the same page right now,” Bauman says of the split between Carbon Washington and the alliance. “It’s a source of disappointment all the way around.”

His organization is now considering their own measure. However, Small cites concerns that a competing measure might confuse voters.

They will continue discussions during the coming months to determine a course of action, which might include avenues completely outside an initiative.

“There is an enormous call for action coming from all quarters,” Small says. “In the short term, clearly not everyone is on the same page on exactly what we should do, but everyone is on the same page in terms of needing to act. That is a really good thing.”

Even some I-732 supporters agree there is value simply in bringing climate change conversations to the forefront of policy discussion. The Snohomish County Democrats endorsed I-732 while also remaining open to other proposals.

“We’re not necessarily throwing all weight behind I-732. It’s the one approach that’s been brought to us at this point,” says Richard Wright, chair of the Snohomish County Democrats. “There may be other initiatives in the works. There is also the work by the governor and there might be legislative remedies attempted. ”

“I think, generally speaking, the Snohomish County Democrats will be supportive of any initiative brought before us to combat climate change,” Wright says. “We take the environment seriously and want to leave behind a better planet than we inherited ourselves.”

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