BARRE — A group of lawmakers plan to introduce legislation Tuesday that would tax carbon pollution and use the revenue to cut various taxes for Vermonters.
Four bills were announced at news conferences Monday as part of a coordinated campaign to begin a conversation about a so-called carbon tax. Lawmakers say they plan to introduce four separate bills focused on reforming different taxes.
At Capstone Community Action in Barre, Rep. Johannah Donovan, D-Burlington, said the legislation she will introduce will cut income taxes for Vermonters, small business and will double the Earned Income Tax Credit used by 43,000 low-income residents.
“This bill cuts the tax rate for the bottom income bracket in half from 3.55 percent to 1.75 percent,” she said. “That can mean a savings for some tax filers as much as $1,000 a year.”
Her bill will also exempt small businesses that earn less than $400,000 a year from the state’s income tax, making the state a “more attractive place for entrepreneurs,” she said.
“This proposal will reduce taxes over the course of a few years and replace revenue with a gradually-rising fee on the pollution that is causing climate change and threatening the Vermont way of life,” Donovan said.
The level of taxation on carbon pollution is not-yet defined, according to Donovan, but would correlate to the total amount of tax cuts.
She said the state spends $2 billion per year on fossil fuels and “putting a price on carbon pollution will speed our transition to a clean energy future.”
“That’s about $3,200 per man, woman and child in the state and since we don’t mine for coal, frack for gas or drill for oil, that means $2 billion leaves the Vermont economy every year,” Donovan said.
Rep. Martin LaLonde, D-South Burlington, will introduce legislation that lowers the statewide property tax “while diversifying and stabilizing Vermont’s education financing system.” Rep. Sarah Copeland-Hanzas, D-Bradford has a bill to phase out the state’s sales tax, which she said would help businesses along the New Hampshire border and other businesses that compete with online retailers that do no charge the state’s 6 percent sales tax. Finally, Rep. Diana Gonzalez, P-Winooski, has a bill to provide a quarterly dividend check to every Vermonter and Vermont business with the carbon tax revenue.
“Climate change is real, and it’s scary, but there’s hope if we work together to solve it,” Gonzalez said. “The bills we introduced today are not bound by party labels. They could work singly or together, but they all move Vermont towards a more prosperous clean energy future.”
The lawmakers are looking to frame the conversation about a carbon tax around tax reform. Energy Independent Vermont, a coalition of advocacy groups, is also behind the push and paid for “Tax Reform & Climate Action” signs used at Monday’s news conferences.
Donovan said Vermont can look to experiences British Columbia, Canada, and California, both of which have implemented some form of carbon tax. Donovan said British Columbia has the fasted growing economy among all Canadian provinces and California has created 1.5 million jobs since implementing a carbon tax in 2013.
Vermont, under former Republican Gov. Jim Douglas, also implemented the Regional Greenhouse Gas Initiative. Under RGGI, partner states have agreed to cap carbon emissions and sell emission allowances at auction. The proceeds are then invested in energy efficiency, renewable energy and consumer benefit programs.
Republicans have strongly opposed a carbon tax, arguing it would increase the cost of heating homes and driving vehicles in a rural state where many people commute to work. Vermont Republican Party Executive Director Jeff Bartley called the proposals outlined Monday “an economically disastrous” tax. He said proponents are trying to “hide a wolf in sheep’s clothing by pretending to take money from one of your pockets and put it into another.”
“The Democrats and Progressives just won’t rest until they’ve they’ve exhausted every conceivable scheme to create a new carbon tax. That’s the only takeaway from reports that Democrat and Progressive lawmakers will submit different proposals this week to undermine our economy and deepen the crisis of affordability their failed policies created,” Bartley said.
The idea has also not been embraced by Democratic leaders in the Legislature. House Speaker Mitzi Johnson, D-South Hero, said she is not backing any of the proposals outlined Monday, but plans to listen to the discussion. She noted that climate change must be addressed on a larger scale than just Vermont.
“We have been working for a long time to develop a twenty-first century tax policy structure,” Johnson said. “While I am concerned about the crisis of climate change and interested in learning more about these proposals and what a comprehensive approach might entail, I believe we must also recognize that this is an issue larger than Vermont. We will continue to advance policies that support healthy communities and grow our economy. Finding solutions that help us build a strong future for the next generation is our priority.”
Donovan said her bill and the three others revealed Monday are “really meant to be a conversation starter.”
“The bill that I introduce tomorrow will strengthen Vermont’s economy, it will lower the cost of living, particularly for those Vermonters who reduce their reliance on fossil fuels, help those Vermonters who are most vulnerable climb out of poverty and spur innovation and create jobs as Vermonters transition to lower carbon methods of heating and transportation. It will help us do our part in protecting the Vermont we know and love from the impacts of climate change,” she said.