VERMONT's $33 BILLION ENERGY TRANSFORMATION AND CARBON TAX

The Vermont Comprehensive Energy Plan, CEP, goal aims to “transform” the Vermont economy. It would require investments of about $33.3 billion, about $1 billion per year for 33 years, during the 2017 - 2050 period, per Vermont Energy Action Network 2015 Annual Report. The CEP could not be implemented without a very high carbon tax and other taxes, surcharges and fees of at least $970 million per year for 33 years.

http://eanvt.org/wp-content/uploads/2016/04/EAN-2015-Annual-Report-...

Proposed Carbon Tax Bill: A large group of Vermont legislators, pressured by RE and other special interests, co-sponsored a bill to enact a law to impose a unilateral, regressive carbon tax on already-struggling households and businesses. Fortunately, the proposed bill died in committee. Governor Scott is against any unilateral carbon tax and against any additional wind turbines on ridgelines. However, RE and other special interests continue to drum up support for their carbon tax that would line their pockets at the expense of all others.

http://www.windtaskforce.org/profiles/blogs/vermont-energy-independent

To make the proposed bill appear attractive, the bill had the usual lip-service statement about Vermont’s government returning the carbon tax revenues in a “revenue-neutral” manner, i.e., in the form of tax credits, subsidies, rebates, grants, etc. The tax credits, etc., were purposely left vague and were circumscribed in ways so people and companies would have no way of knowing who would qualify for what credit, and what they would get back.

The carbon tax would be increasing to $520 million per year, less 10% as subsidies for the Home Weatherization Assistance Fund, HWAF, and the Vermont Energy Independence Fund, VEIF, less sales tax reduction from 6% to 5%*, would yield the “leftover” carbon tax. All of that could not take place without some state and local bureaucrats spending time on it. The below table shows a state and local government administration cost of 5%. 

* Sales tax reduction, per proposed bill would be: 

Fiscal year 2018, $31.5 million

Fiscal year 2019, $48.6 million

Fiscal year 2020, and after, $66.8 million

Left Over Carbon Tax: Once the carbon tax act is safely in place, “fine-tuning” acts likely would whittle away at the tax credits, etc., and provide even more subsidies to special interests, per Vermont economic development “policy”.

Carbon Tax Another Headwind for the Vermont Economy: Vermont's government is almost always short of money. It promises to give back money? Why take it in the first place? Vermont's government likely would disburse the carbon tax revenues to favored subsidy-dependent constituencies, per “economic development policy”. About 5% of the $520 million to be raised by the carbon tax would be government overhead for doing the "disbursing".

Vermont's Economic Development Policy: Left-leaning Democrat politicians have adopted an unwritten “economic development policy”: Maximize the schlepping of federal funds into Vermont to start/subsidize government programs, and start/subsidize government/business partnerships, which, as a side benefit, create a spectrum of subsidy-dependent constituencies, that produce reliable votes year after year.

These programs and partnerships usually pay too little in state and local taxes to more than offset their subsidies, i.e., they do not provide a significant net gain.

Annual government budget deficits are offset by means of annual increases of taxes, fees and surcharges imposed on the near-zero, real growth private sector.

The “policy” has failed to create a vibrant, growing private sector, with prosperous households and businesses, since 2000.

http://www.cnbc.com/2014/06/24/americas-top-states-for-business.html

If the carbon tax bill were enacted, special interests, seeing this large source of funds, would pile on it, and grab as much of it as possible, as happened with the ARRA funds a few years ago. The Vermont approach would be complicated and lead to more bureaucracy and rules and regulations. It would definitely not be hands-off.

For Vermont to impose a unilateral carbon tax would make its economy less competitive versus other states, i.e., more brain drain, and fewer good-paying, steady, full-time jobs, with good benefits in the private sector.

The carbon tax would be another headwind for the near-zero, real-growth Vermont economy.

The carbon tax would further aggrandize Vermont’s government, which is too large, too inefficient, spending too much money, is bloated with programs, and is running annual deficits, that are offset with annual increases of taxes, fees and surcharges, as if money grows on trees.

The carbon tax would transfer up to $520 million per year, less sales tax reductions, into incompetent, inefficient government hands for "disbursements"; EB-5, Health care website, Montpelier Heating Plant, etc. come to mind.

State Government Growing Much Faster Than Private Sector: Employment in state’s government sector has grown 13.56/2.85 = 4.76 times faster than employment in the private sector since 2000. The private sector is forced to pay for the government sector with ever-increasing, taxes, fees, and surcharges, as well as being imposed upon with various mandates.

No wonder the private sector has been so anemic and unable to create good-paying, steady, full-time jobs with good benefits.

- Vermont’s elderly and dependency populations are growing; as a group they likely pay less and less taxes, and require more and more subsidies.

- Many of Vermont’s college graduates move out of state or stay out of state for better jobs.

- Many of Vermont’s young families with children, the backbone, tax-paying people of the Vermont economy, are moving elsewhere.

* Includes federal, state, local, education, etc.

British Columbia, Canada, Carbon Tax: Proponents of the carbon tax point to it being a success in British Columbia, Canada. BC’s levy started at $9 per metric ton in 2008, and gradually increased to $27 per metric ton in 2012, or about 23 c/gallon; much less than Vermont. I would be in favor of the BC carbon tax, but only if it were:

1) NOT used for government programs

2) FULLY reimbursed

3) Adopted all over the US

BCs carbon tax was initially CLAIMED to be 100% reimbursed by means of reductions in personal and business income tax rates. However, that turned out NOT TO BE TRUE. The reimbursements were restricted bit by bit, to finance various government programs. See URLs.

http://business.financialpo...

https://www.fraserinstitute...

Carbon Tax Impact On A Typical Vermont Family, as reported on VTDigger:

Any tax, including a carbon tax, passing through the hands of government suffers from "the sticky fingers syndrome", 2 dollars go in about 1.5 dollars come out. The difference stays to feed the growing government bureaucracy. 

The key word missing in most discussions is UNILATERAL. VT's government imposing on Vermonters a unilateral carbon tax is like shooting them in the feet. 

If the carbon tax were nationwide, I would support it.

The carbon tax would:

 
- Impose a $10/ton tax of carbon emitted in 2017, increasing to $100/ton in 2027.
- Generate about $100 million in state revenue in 2019, about $520 million in 2027.
- Be added to the fuel prices at gas stations and fuel oil/propane dealers. 
- Drivers should expect a tax increase of 9 c/gal of gasoline in 2018, increasing to about 89 cents in 2027.

- Homeowners, schools, hospitals, businesses, etc., should expect a tax increase of 58 c/gal of propane and $1.02/gal of heating oil and diesel fuel in 2027. 

- A typical household (two wage earners, two cars, in a free-standing house) would pay additional taxes in 2027 of about:

- Some of the carbon tax extortion would be at the pump, some when the monthly fuel bills arrive, and some as higher prices of OTHER goods and services.

Driving = $0.89/gal x 2 x 12000 miles/y x 1/(30 miles/gal) = $712/y

Heating = $1.02/gal x 800 gal/y = $816/y

Total carbon tax in 2027 = $1528/y

Sales tax reduction 5/6 x 1400 = $233/y

Net tax increase = $1295/y

- The hypocritical sop of reducing the sales tax from 6 to 5 percent would save that household about $233 in sales taxes, for a net loss of $1295 in 2027. That means such households, the backbone of the Vermont economy, would have about $1300/y less to make ends meet.

- Many of these households have had stagnant or declining, spendable real incomes (after taxes, fees, surcharges; other recurring expenses, etc.), plus dealing with a near-zero, real-growth Vermont economy, since 2000.

- With less real income, and higher real prices for goods and services, they also would have to make their own energy efficiency improvements.

 http://watchdog.org/250281/carbon-tax-debate-vermont/