As Gas Prices Rise, Teenagers’ Cruising Declines

06/29/2008 by Charles Komanoff

As Gas Prices Rise, Teenagers’ Cruising Declines (NY Times)

A Convenient Tax - June 2008

06/27/2008 by Daniel Rosenblum

We launched the Carbon Tax Center seventeen months ago to inform and engage the public about the need for and benefits of revenue-neutral carbon taxation. Coincidentally, that same week the United States Climate Action Partnership, a coalition of mainstream environmental organizations, major electricity generators and giant industrial corporations, announced its formation and legislative agenda: a federal carbon cap-and-trade system. To state the obvious, USCAP has a lot more money and political clout than we do. Not surprisingly, USCAP managed to buy a tremendous amount of press and political support for its cap-and-trade program.

Our strategy at CTC has been simple. We provide an objective source of carbon tax and cap-and-trade related facts, economic arguments and news. We let the public know about the broad support for a carbon tax from economists and opinion leaders across the political spectrum. We were confident the public and Congress would eventually recognize that a revenue-neutral carbon tax is far superior to cap-and-trade for a variety of efficiency and equity reasons that we set forth in an issue paper on our Web site and in a variety of debates and other forums. We expected that Americans would see that the cap-and-trade scheme proposed in bills such as Lieberman-Warner is essentially a tax, with the revenue doled out to special interests. We were betting that once cap-and-trade was revealed as a hidden tax proposal, its putative political advantage over a straightforward carbon tax would vanish.

Events are proving us right. Cap-and-trade’s aura of inevitability evaporated in the U.S. Senate this month. Why? Because, just as we predicted, Senators balked at the cap-and-trade bill’s complexity, its windfall profits for carbon polluters and the feeding frenzy to distribute the revenues in classic pork-barrel fashion.

We don’t buy the notion that in rejecting cap-and-trade, the Senate is defying the public outcry for an effective response to global warming. As John Tierney wrote in his New York Times science blog, “Maybe a better deal — and a better policy — will emerge from this failure.” Tierney emphasized that James Hansen, the NASA climate scientist who has been so outspoken on the imminence of global warming, now backs a “tax-and-dividend approach” with carbon revenues “divided equally, so that people who use less energy than average — like lower-income people — would get back more than they spend.” As Tierney pointed out, “Refunding money directly removes the temptation for Congress to treat … carbon-reduction revenues as a chance to dispense trillions of dollars worth of favors — as proposed in last week’s bill, which was aptly dubbed ‘pork-and-trade.’”

Sound familiar? It should. Hansen’s proposal is the same revenue-neutral carbon tax the Carbon Tax Center has been urging all along. In fact, if you’ve been keeping up with our posts you may have noticed that CTC adopted the tax-and-dividend terminology several weeks ago, a switch we picked up from Peter Barnes’ excellent work on cap-and-dividend.

Meanwhile, as readers of our posts and our “Latest News” headlines surely know, the real action on revenue-neutral carbon pricing is in Canada. Liberal Party Leader Stéphane Dion has transformed the climate debate in Canada with his proposal for a $15.4 billion, 4-year “Green Shift.” Read our post on the subject for a quick summary, the Green Shift Handbook for the details and our “Latest News” for reaction to the Green Shift in Canada and around the world. And on Tuesday (July 1), British Columbia inaugurates the Western Hemisphere’s first substantial and comprehensive carbon tax — a day after it distributes dividend checks from the revenue-neutral tax to households and businesses.

A tremendous opportunity awaits. The failure of the Lieberman-Warner cap-and-trade scheme has created a huge opening for a better and more workable method for putting a price on carbon. Splits within USCAP have re-emerged. In a powerful speech on June 25, Lewis Hays, III, Chairman and CEO of FPL Group (a member of USCAP), reiterated his support for a carbon fee stating, “[T]he simplest and most effective way to price carbon is with a continuously escalating fee – or a ‘tax’ as the big carbon emitters like to call it. Under a carbon fee that starts modestly and rises steadily over time, companies will find it more and more expensive to use dirty fuels.”

To take advantage of the opportunity and to capitalize on the post-election window in which new policy ideas can command serious attention, the Carbon Tax Center is organizing a conference in Washington, D.C. this November. Our goals are to:

• increase public awareness of the environmental and economic advantages of a carbon tax over other policies to reduce greenhouse gas emissions;

• place carbon taxes higher on the U.S. Congressional agenda;

• enable carbon tax advocates to forge connections with one another:

• address obstacles (political, economic, and scientific) to enacting a U.S. carbon tax, and to discuss the ideal form of such a tax;

• recognize leaders who have publicly advocated a U.S. carbon tax; and

• discuss lessons learned from the Green Shift proposal in Canada.

We are assembling a terrific roster of speakers and participants. James Hansen has already agreed to speak, and we anticipate many more leading voices on climate change and carbon pricing.

We need your financial help to make our conference happen and to continue our essential work. You can contribute to CTC in three ways, two of which are tax-deductible:

Tax-deductible:

Write a check or money order to ELPC (Environmental Law & Policy Center), writing Carbon Tax Center in the memo line; mail it to ELPC at 35 East Wacker Drive, Suite 1300, Chicago, IL 60601. ELPC is CTC's fiscal sponsor.

or

Make an on-line contribution via Groundspring by clicking on the DONATE NOW box on our website, www.carbontax.org.

Not deductible:

Write a check or money order to Carbon Tax Center and send it to our New York City mailing address: CTC, 636 Broadway, Room 602, New York, NY 10012.

Please be as generous as you can, and please donate today. Thank you.

Sincerely,

Charles Komanoff
Dan Rosenblum

Rethinking the Country Life as Energy Costs Rise

06/24/2008 by Charles Komanoff

Rethinking the Country Life as Energy Costs Rise (NY Times)

Dion: “Make Polluters Pay and Put Every Single Penny Back into the Hands of Canadians”

06/20/2008 by Daniel Rosenblum

Canada’s Liberal Party Leader Stéphane Dion yesterday dramatically transformed the debate in Canada over how to reduce greenhouse gas emission by proposing a $15.4 billion “Green Shift” over a four-year period. The proposed revenue-neutral carbon tax shift puts a significant price on carbon and demonstrates the type of leadership that’s yet to emerge in the United States.

Introducing the carbon tax shift, Dion eloquently explained:

The Liberal Green Shift is as powerful as it is simple. We will cut taxes on those things we want more of such as income, investment and innovation. And we will shift taxes to what we all want less of: pollution, greenhouse gas emissions and waste. We need to make polluters pay an put every single penny back into the hands of Canadians.

The Green Shift Plan will be good for the environment and good for the economy. Good for the planet and good for your wallet. We need to make real progress in the fight against climate crisis, and at the same time make our economy more competitive. While energy prices continue to rise, we need to encourage energy efficiency.

            Some have said that nobody would have the courage or the political will to
            do what we believe is right. We need to do it. We will do it.

Dion’s message and a detailed description of the Green Shift can be found in the Green Shift Handbook, easily downloaded from the Green Shift web page. The Green Shift will begin with an immediate $10 per tonne tax on carbon and steadily rise by an additional $10 per tonne each year, reaching $40 per tonne within four years.

The tax will apply at the wholesale level to all fossil fuels based upon their respective carbon content. The tax will not apply to gasoline at the pump, since the existing excise tax on gasoline at the pump is already the equivalent of $42 per tonne of carbon.

Revenue-neutrality is a key element of the Green Shift, which clearly states that “For every dollar raised in taxes there will be a dollar returned to Canadians in tax cuts.” The Auditor General will ensure the Green Shift’s revenue-neutrality.

The Green Shift will return the “pollution dividend” to Canadians through:

• Significant, broad-based income tax reductions, increasing each year as the pollution tax revenue rises;

• Reforms to the tax system to make it fairer for low-income Canadians, including;

o Introducing a new, universal child tax benefit worth $350 per child, per year,
on top of all existing child benefits;

o Replacing the existing $1,000 employment credit with a $1,850 refundable
employment credit targeting those making less than $50,000 per year;

o Enriching the Working Income Tax Benefit, making it available on the first
dollar earned; and

o Making the Disability Tax Credit refundable;

• Additional support for rural and Northern Canadians, with every rural Canadian receiving, up front, an annual Green Rural Credit of $150;

• A boost in the Northern Residents Deduction for those living in Northern
  Canada;

• Broad-based corporate tax reductions;

• Small-business income tax reductions;

• Accelerated capital cost allowances for green technologies; and

• Better research and development incentives.

The Green Shift is already receiving massive press coverage in Canada, a small sample can be found in our “Latest News” column. And as the press coverage makes clear, the stakes are high for both the environment and for Dion and the Liberal Party’s political future. Dion Stakes His Future on Being Greenest of Them All, according to the Globe and Mail. The attacks by Dion’s political opponents have already begun. See, for example, the Vancouver Sun story Dion's 'Green Shift' Debuts to Heavy Fire, “The Conservative government and the New Democratic Party assailed Liberal Leader Stephane Dion's proposed national carbon tax Thursday as a crazy and irresponsible plan….”

Canadian environmentalists have been far more supportive. According to an article in today’s Montreal Gazette, Greenpeace offered qualified support for the Green Shift arguing the price should be even higher, Équiterre says it’s the type of policy it could support and the Sierra Club Canada’s executive director said, "The benefit of a carbon tax is that it can be applied quickly, thereby raising the price of carbon emissions sooner; cap-and-trade systems have their benefits but they do take longer to implement properly."

That’s CTC’s response, too. We applaud Dion’s political courage, but we prefer a higher carbon tax. We fully support the concept of revenue neutrality and like the “shift” and “dividend” language, although we would prefer more direct return of the revenues through a Green Shift/carbon tax dividend or offsetting tax reductions. We applaud Dion’s targeting of Green Shift/carbon tax revenues to low-income rural energy users, necessary for both equity and political reasons. Finally, we’re intrigued that the Green Shift does not tax gasoline at the pump, although we expect that some portion of the tax will be passed through to retail customers. As we noted in a post last week, gasoline prices have already increased as much in the last year as we proposed for the next ten years. A floor on gasoline prices maintained by a revenue-neutral carbon tax might be appropriate.

There will be plenty of time to carefully examine the details of the Green Shift and, we’re sure, plenty of lessons to be learned about both the substance of the Green Shift and the politics of promoting a carbon tax. Stay tuned!

Photo of Stéphane Dion: http://www.liberal.ca/glance_e.aspx

Driving Less, Americans Finally React to Sting of Gas Prices

06/19/2008 by Charles Komanoff

Driving Less, Americans Finally React to Sting of Gas Prices (NYT)

Time for a Floor on Gas Prices?

06/9/2008 by Daniel Rosenblum

High gasoline prices are ravaging rural Americans, particularly families with low incomes that drive relatively long distances in gas-guzzling pick-up trucks and vans. As described in today’s front-page New York Times story Rural U.S. Takes Worst Hit as Gas Tops $4 Average:

Here in the Mississippi Delta, some farm workers are borrowing money from their bosses so they can fill their tanks and get to work. Some are switching jobs for shorter commutes.

People are giving up meat so they can buy fuel. Gasoline theft is rising. And drivers are running out of gas more often, leaving their cars by the side of the road until they can scrape together gas money.

Now imagine that Congress had enacted a revenue-neutral carbon tax years ago. Instead of the current high gasoline prices combined with huge profits for the oil industry, we would have high gasoline prices offset by large dividends being returned to all Americans. And, if the revenue-neutral carbon tax had been phased in slowly as recommended by the Carbon Tax Center, drivers would have had time to adjust to the higher costs by purchasing more fuel-efficient vehicles and changing their driving habits.

That’s a missed opportunity with devastating economic consequences. What do we do now? Provide a gasoline-tax holiday to reduce the price at the pump? Impose a carbon tax and increase the price of gasoline? The gas tax holiday idea was a cheap political stunt that was effectively rejected by the voters in North Carolina and Indiana, and by most politicians.

Should gasoline prices be increased further now? Maybe not. While a carbon tax on other fossil-fuels is still necessary, maybe it’s time to just maintain the status quo on gasoline prices.

Seventeen months ago the Carbon Tax Center proposed phasing in a revenue-neutral carbon tax that would have resulted in a ten cent a year increase in gasoline taxes for each of ten years. A $1 increase in gasoline taxes after ten years would have resulted in a somewhat lower increase in gasoline prices since the full amount of the tax would not have been passed through to consumers.

We have already seen prices increases far in excess of those which would have resulted from the CTC proposed carbon tax. The good news is that we are seeing just the type of positive results we expected. People are buying smaller and more efficient cars and they are changing their driving habits. The bad news is that there has been no carbon tax dividend to help people deal with the higher prices. The oil companies and the oil producing countries aren’t giving back any of their profits.

Now is the time to maintain high gas prices and to lock in efficiency gains by using a carbon tax to create a “floor” gasoline price. If market forces (or and end to market distortions) results in lower oil prices, gasoline taxes would maintain the current pump price. Prices would remain the same, but the gasoline taxes would be returned to all Americans through a carbon tax dividend.

Coincidentally, the Tampa Tribune today published a powerful editorial favoring a carbon tax over cap-and-trade, stating:

A better way to approach the problem is to put a direct tax on carbon, then return the extra revenue to the public through lower income taxes and more federal support of proven technologies, such as public transit. Instead of trying to pick winners and losers in the private sector, Congress should increase grants for university research in clean energy.

While the Carbon Tax Center prefers a carbon tax dividend to federal support of what Congress might consider to be “proven technologies,” we welcome the Tampa Tribune’s support of carbon taxes and its recognition that such taxes make sense even with current gasoline prices:

Consider how effectively the higher price of gasoline this year has begun to change behavior. Ridership on Hillsborough's transit system, HART, is up 7.2 percent this year. Sales are strong for smaller cars. Motor scooters are selling like hotcakes.

But consumers are right to be angry. They're getting no help making the transition to a lower-carbon life. The profits from expensive oil are going to big oil companies, foreign producers and speculators, while most of us see our standard of living fall.

It’s time to use a revenue-neutral carbon tax and dividend to maintain the environmental benefits of today’s high gasoline prices, but to redirect the cash flow from the oil industry to all Americans.

“Price Matters, Enormously” — Big Autos Stagger Under the Weight of $4 Gas

06/3/2008 by Charles Komanoff

"Price Matters, Enormously" -- Big Autos Stagger Under the Weight of $4 Gas (NY Times)

The Price Isn’t Quite Right Yet

06/3/2008 by Charles Komanoff

The Price Isn't Quite Right Yet (Gristmill)

It’s Easier to Be Green if It Also Saves Money

05/31/2008 by Charles Komanoff

It’s Easier to Be Green if It Also Saves Money (NYT economics column)

Soaring Fuel Prices Take Withering Toll On Truckers

05/27/2008 by Charles Komanoff

Soaring Fuel Prices Take Withering Toll On Truckers (NY Times)