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California Senate President pro tem proposes carbon tax on transportation fuels

21 February 2014

California Senate President pro tempore Darrell Steinberg proposed a carbon tax on fossil transportation fuels to replace the coming cap and trade mandate on that sector in 2015. Under Steinberg’s proposal, the price of carbon fuel would rise steadily, starting at an estimated 15¢/gallon in the first year. In 2020, the tax is estimated at 24¢/gallon—lower than the upward price risk under cap and trade at 40¢/gallon. In 2029, the carbon tax on gasoline would pass the upward price risk of cap and trade, Steinberg said.

In his address to the Sacramento Press Club, Senate leader Steinberg (D – Sacramento) outlined the four principles of his proposal:

  1. Set aggressive targets in statute beyond 2020 to reinforce the climate goals of AB32 through 2030 and 2050.

  2. Continue Cap and Trade for industrial plants but replace Cap and Trade’s current 2015 expansion into the transportation sector with a broader, more stable and more flexible Carbon Tax of a similar amount on these same fuels.

  3. Return two-thirds of the Carbon Tax revenues to poor and middle-income Californians through a state Earned Income Tax Credit for families making less than $75,000 per year.

  4. Inject the remaining Carbon Tax revenues into a multi-billion dollar 21st Century development of California’s mass transit infrastructure to reduce traffic and pollution from cars using fossil fuels.

Under either a Carbon Tax or Cap and Trade applied to fuel, consumers will pay more at the pump. That’s necessary. Higher prices discourage demand. If carbon pricing doesn’t sting, we won’t change our habits. On the issue of how this requirement is achieved, we have a choice: and I believe a carbon tax is a better choice than Cap and Trade for fuels.

Under Cap and Trade, no one can tell us whether fuels will trade at 10 cents or 40 cents a gallon in 2015, at any given time and without warning. A carbon tax is stable. A carbon tax is significantly less vulnerable to gaming. A carbon tax is transparent.

… For climate policy to work, it has to sting. I am concerned about who we sting. I say we return the majority of the money to the people who can least afford to foot the bill and who are already suffering most from climate change. My carbon tax proposal will be used to alleviate the financial burden of carbon pricing among low- and middle-income families.

—Darrell Steinberg

February 21, 2014 in Brief | Permalink | Comments (3) | TrackBack (0)

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Comments

I'm all for increased fuel taxes to fund transit budgets but this just takes the cake. The union between leftists, democrats, extremist environmentalists, warmists, etc is just incredible.

You want people to pay taxes in the name of global warming, so that politicians can redistribute these funds to others (trusted democrat voting base). Wow..... If this idiot politician instead said the funds would go to roads or even california's high speed rail project, I'd give him a pass... but this? Pure extremist leftwing politics. At least this guy is honest about his intent.

For all the people that said skeptics were tin hat, paranoid crazies, please read this article.

Mr Steinberg's approach is eminently sensible. Cap and trade does not make sense, look at the EU experience. If it were not for the US Republican hysteria over "no new taxes" a significant increase in federal fuel tax would be the best solution all round. Earned income credit addresses the inequality issue that is going to bite the US sooner or later, much fairer than various government hand outs. (Get your tin hat here).

Progressively taxing pollution may be the best way to accelerate mass production of cleaner electrified vehicles and cleaner e-energy production.

A one percent extra (Fed) sale tax per month could do it.

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