Families would see a small increase in costs from carbon tax

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Gov. Jay Inslee’s proposed tax on carbon polluters would translate to a $12 a month increase in costs for the state's poorest families. The cost increase would be slightly more than $20 a month for families smack in the middle, and about $30 a month for the state's wealthiest families.

Those estimates emerged as the Washington Office of Financial Management predicted a 12-cent-per-gallon gasoline-price increase if Inslee’s carbon emissions plan goes into effect. The OFM released a report on the topic Wednesday

OFM economists have also revised another pair of predicted numbers in Inslee's plan to raise money and trim carbon emissions with a tax -- technically a charge or fee -- on the state's top polluters. The number of affected polluters has dropped from roughly 130 to between 80 and 90, because a number of firms that essentially serve as middle men rather than carbon producers have been removed. And instead of being expected to raise $1 billion a year, that estimate has been revised to $1.3 billion annually, said Chris Davis, the governor's senior advisor for energy and carbon markets, and Marc Baldwin, assistant director of OFM’s forecasting division.

The House Appropriations Committee is scheduled to hear testimony Thursday afternoon on Inslee's plans, which have been put into a bill by Rep. Joe Fitzgibbon, D-Des Moines. Inslee needs 50 House votes before the plan can go to a hostile Senate. Supposedly, the House Democrats are close to lining up the 50 votes.

Inslee’s plan calls for Washington's biggest polluters to pay for the right to produce specific amounts of carbon emissions, which scientists have linked to global warming. If Inslee’s proposed system is installed, polluters would be allowed to trade or sell their pollution quotas to other businesses. During the program’s first year, the affected business would divide up the same amount of carbon emissions as they produced in the previous year. Then the state would trim that total by a tiny bit in each subsequent year.

Inslee would like the extra $1.3 billion a year to be divided among transportation, education, support for Washington businesses competing against out-of-state and foreign firms, and tax credit checks for roughly 500,000 lower-income families.

Inslee hopes to reduce statewide carbon emissions to achieve greenhouse-gas limits that the Legislature set in a 2008 law. That measure set a goal of reducing the state’s greenhouse emissions to 1990 levels by 2020, with further trimming of emissions later.

A statewide poll in December found that 53 percent of the respondents would support a carbon tax if it is offset by some tax decreases elsewhere.

Highlights of the OFM report include estimates that the carbon emissions tax would result in oil refineries passing the costs along to raise the price of gasoline by 12 cents a gallon in 2016.

However, that estimate is politically fuzzy.

The Republican-controlled Washington Senate recently passed an 11.7-cents-per-gallon gas tax hike, which would be phased in across three years, to pay for transportation projects. But the Democratic-controlled House has not yet unveiled its operating budget and probable revisions in its transportation budget. The House Democrats have not decided yet whether to go with carbon-tax or gas-tax revenue for their transportation package, or a combination of both. That decision would map out how much of a carbon tax or gas tax will be in play in negotiations between the Senate and House -- with the oil industry reacting to the final results.

The OFM's calculations show that a carbon tax of $12 per metric ton of emissions -- the most commonly cited figure in the past several months -- would lead to the following annual increases in families' costs on gasoline and other activities that directly link to carbon emissions: The expected increase in costs for families among the top 20 percent in incomes would be $362 a year; second highest 20 percent, $289 a year; the middle 20 percent, $245 a year; the sceond-from-bottom 20 percent, $199 a year; and the bottom 20 percent, $144 a year.

The carbon costs to families would be slightly regressive, because the lower income families pay bigger percentages of their incomes on gasoline, Baldwin said.

The effects of the carbon emissions tax on employment would be negligible in most cases, ranging -- plus or minus -- from a handful to a couple hundred in most fields of employment through 2035. Overall, the effect would be to create a very small gain in jobs. Waste management, health care and social assistance jobs would increase by a few hundred by 2035. The OFM report said science and technical jobs would increase by roughly 1,750 by 2035 and construction jobs would increase by 2,750 in the same period under the carbon tax program.


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About the Authors & Contributors

John Stang

John Stang

John Stang is a freelance writer who often covers state government and the environment. He can be reached on email at johnstang_8@hotmail.com and on Twitter at @johnstang_8