Raised Bill 1064, An Act Establishing a Carbon Price for Fossil Fuels Sold in Connecticut, is proposing a carbon tax scheme identical to carbon tax billed raised the previous two years in Connecticut and may be viewed here.
In New Hampshire, H.B. 735 is a similar bill in construct, thought the tax formula is somewhat different from Connecticut’s. Details for this bill are available here.
Maine’s bill, H.P. 343, takes a rather different tack. While imposing a carbon tax on various fuels, it carves out electricity from the tax, unlike CT and NH. That’s because it’s trying to promote the electric utilities; and in fact the bill proposes that electric utilities be the beneficiaries of all the taxes collected, for them to dispose of in some undisclosed manner to ratepayers. Details for this bill are available here.
For Vermont, we show two bills. Like Maine, Vermont saves the electric utilities from having to pay the tax. One of the proposed bills even gives the tax money to the electric utility to let them disburse credits to ratepayers. Given the way this is structured, there’s no connection between how much you pay in tax and how much you get back from the utility. Details for this bill are available here.
Rhode Island recently introduced their own carbon tax bill, H 5869. Details for this bill are available here.
The titles for all these bills is a misnomer – it has nothing to do with the pricing of fossil fuels. Rather, the bills establish a new tax, plain and simple, to be collected by the state taxing authority at the first point of sale in the state of energy products.
How much is the tax?
The Connecticut tax starts at $15 on each ton of carbon dioxide (CO2) emitted or used by various energy sources to “produce heat, electricity or motion.” The only energy sources exempted are electricity generated from hydro or nuclear sources, and some biofuels. That means the tax is imposed on all gasoline, diesel, electricity (other than noted above), heating oil, propane, kerosene, and natural gas. See the respective tabs for how Vermont, New Hampshire and Maine work.
How long will the tax last?
As mentioned, the tax starts at $15 per ton of carbon dioxide, and then increases every year, forever. The increase is $5 per ton of CO2 every year; so that while it starts at $15/ton in the first year, 2021, it’s $35/ton in year 5, and $60/ton in year 10, ad infinitum!
No other tax in the world is structured like this, not even Maine’s or New Hampshire’s.
The only purpose of these bills is to force consumers to stop using gasoline, diesel, heating oil, propane, natural gas and even electricity (that isn’t fueled by wind or solar), while the rest of the country doesn’t have to. The radical ideologues who support these bill won’t be satisfied until we’re living back in Stone Age conditions.
Note in the case of Connecticut’s bill, some portion of the tax is refunded as a tax credit every year to residents and businesses. What this means is that throughout the year, everyone in the state is paying the tax, and only will receive a partial refund at the end of the year. This will impose a cash hardship on people, especially low-income residents of the state. The refund is the same for everyone, regardless of how much fuel one uses or one’s income. Thus the tax is highly regressive. And since you are getting a partial refund, you will be less inclined to stop using fuel and pay the increasingly higher prices, and businesses are likely to pass on to consumers the increased costs imposed on them from the tax, even if they’re getting a partial refund as well. That means the tax is highly inflationary, and the partial refund defeats the purpose of the tax of forcing people to stop using fuel entirely.
What does this mean for me in dollar terms?
If you heat with fuel oil, the carbon tax in Connecticut will cost you 16.80 cents per gallon in the first year, 39.20 cents per gallon by the fifth year, and 67.20 cents per gallon by year 10. And since the tax continues to go up forever, it will eventually cost you an infinite number of dollars, strange as that may sound. In dollar terms, your heating costs (based on 800 gall. annual consumption) will go up $134 in year 1, $314 in year 5, and $538 in year 10. See the tabs for Maine and New Hampshire for the effect of the taxes in those states.
The tax on gasoline in Connecticut will be 14.70 cents per gallon in year 1 costing you an additional $96.43; 34.30 cents per gallon in year 5 costing you $225.016, and 58.80 cents per gallon in year 10 costing you $385.73. This is in addition to the 25 cent/gallon state excise tax on gasoline, the 18.4 cents/gall. federal excise tax, the 8.81% state gross earnings tax on gasoline, and any tolls you may have to pay.
The cost of diesel for trucks in Connecticut will go up 16.80 cents per gallon in the first year, costing a $490 per truck, increasing to almost $2,000 per truck by 2030. That increased transportation cost will be passed on to consumers in the form of higher prices for food, prescription medicines, clothing, and more.
Heating your home with propane in Connecticut will cost you 9.53 cents/gall. with the tax in year 1, or $95.25 (on 1000 gall consumption); and 22.23 cents/gall. in year 5 or $222.25 more; and 38.10 cents/gall. more in year 10 or $381.00.
If you heat your home with natural gas in Connecticut, its carbon content is about 11.71 lbs of CO2 per ccf. A typical home uses 1000 ccf per year, so the tax in year one for gas users will be about $87.82; in year five it will be $204.92; and in year ten it will be $351.30.
And remember, while these numbers only project the tax burden out ten years, the tax in fact will increase arithmetically forever.
According to ISO-New England, about 49% of electricity is generated at power plants with natural gas, about 1% with coal, and 1% with diesel. These all will result in a pro-rated carbon tax of of about $0.00156/KWhr in year 1, increasing to abut $0.00626/KWHr in year 10, resulting in a carbon tax bill for the average residential consumer of $18.77 in year 1 and $75.08 in year 10.
EXAMPLE: Suppose you heat with heating oil, drive two cars, and use electricity. Your tax in year 10 (2030) will be $538 for heat, $771 for gasoline, and $75 for electricity for a total tax bill during the year of $1,384! And that’s just the tax, not the cost of any of the fuels or electricity themselves, nor the cost of every product you purchase which will all go up as merchants pass on the tax costs to you.