Seeking c ommon ground on carbon taxes

1. Seeking common groundon carbon taxes Yoram Bauman, Eric de Place, Ian Siadak Sightline Institute Nov 14, 2012

4. Carbon concentrations going up Source:: http://www.esrl.noaa.gov/gmd/ccgg/trends/

5. Arrhenius (Swedish chemist), 1896

11. We can solve both problems with a carbon tax • A tax on the carbon content of fossil fuels • The tax will reduce carbon emissions... • ...and the revenue can be used to make our economy stronger and create jobs by funding public investment. • Transportation infrastructure is my focus today, but education/health also possible

12. BC’s carbon tax: $30/ton CO2 • Revenue of over $1 billion per year • Impact on energy prices • Petroleum: ≈30¢ per gallon • Electricity from coal: ≈3¢ per kWh • Electricity from natural gas: ≈1.5¢ per kWh • (≈$1.50 per mmBTU/ mcf/ 10 therms)

13. BC Emissions 2007-2010

15. Revenue neutral $4,109 million Personal income tax cuts - Lowest provincial income tax up to $119,000 $935 $3,348 million $543 Low income tax credit - Family of 4 receives $300 annually • Business tax cuts • Lowest Corporate Tax rate of G7 countries by 2012 • No small business tax in 2012 $2,631 *Projected total revenue and reductions for fiscal 2011/12 through 2013/14 Carbon tax revenues* Tax reductions

16. Benefits for British Columbia’s economy and environment • Emissions have dropped both in absolute terms and relative to the rest of Canada • GDP grew faster than the rest of Canada (and faster than in the U.S.) • Reduced business and personal taxes to some of the lowest levels in Canada

17. What would this look like here? • 85m tons of CO2, raising $2.3b per year • Could eliminate state property tax, nearly eliminate B&O, or cut sales tax by 1/3rd • And/or could boost public investment • Jim Sinclair, BC Federation of Labour: “If you're going to keep [the tax], then the money should be used for creating jobs and greening the environment” (including public transportation, housing retrofits).

18. Transportation Option • Carbon tax as in BC • 50% for tax rebates as in BC, including targeted offsets for the manufacturing sector and for low-income households • 50% for public investment, focused on road maintenance, transit, freight mobility

19. 50% public investment, 50% tax rebates ($2.3b total) 50% tax reductions 50% public investment

20. Economic modeling • We contracted with PERI (out of U Mass – Amherst) • Used IMPLAN input-output model of Washington State • No small-grain detail to do industry-level analysis, so the results are preliminary.

21. Economic modeling

22. Economic modeling • Result from IMPLAN: Net increase of 4,000 jobs, $385m in GDP • Underlying idea: Shifting consumption from fossil fuels to infrastructure can be good for jobs and economic growth • Caveat: This does not include detailed analysis of impacts on specific industries

23. Economic modeling • Next step: industry-level analysis • Costs: $30/ton CO2 • Benefit: $650m for road maintenance • Benefit: $300m for freight mobility/transit • Benefit: $160m for eliminating B&O taxes for manufacturers • Benefit: $650m in property tax rebates

24. Economic modeling • Next step: industry-level analysis • Costs: $30/ton CO2 • Benefit: $650m for road maintenance • Benefit: $300m for freight mobility/transit • Benefit: $160m for eliminating B&O taxes for manufacturers • Benefit: $650m in property tax rebates

26. Common ground? • This could be a win-win, and that doesn’t happen all the time • We need to fund transportation infrastructure • We need to reduce carbon emissions

27. Asks • Help us investigate whether this could be a win-win in specific industries • Help us craft a policy that will lead to good jobs in Washington • Yoram Bauman, Eric de Place, Ian Siadak • Contact us all via eric@sightline.org