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Washington state to vote on first US revenue-neutral carbon tax in November

On November 8, Washington will vote on the US’ first revenue-neutral carbon tax. If approved, Initiative 732 would establish a tax on carbon emissions at $15 per metric ton of emissions in July 2017; $25 in July 2018, and then 3.5% plus inflation each year until the tax reaches $100 per metric ton. The tax would be phased in more slowly for farmers and nonprofit transportation providers.

I-732 in return lowers other taxes:

  • Lowers the sales tax by one percentage point (from 6.5% to 5.5%).

  • Funds an Earned Income Tax Credit (EITC), providing up to $1,500 a year for approximately 460,000 low-income working families.

  • Reduces the business and occupation tax rate from 0.484 to 0.001%.

A financial impact analysis by Washington’s Office of Financial Management concluded that during the first six fiscal years, state General Fund revenue would decrease by a net amount of $797.2 million.

This results from implementing a new carbon tax, reducing the state retail sales tax rate by 1 percentage point and reducing certain manufacturing business and occupation taxes. The Working Families Tax Exemption Program would be funded. Sales tax revenue for the state Performance Audits of Government Account would decrease by $8.9 million. Local tax revenue would increase by $156.1 million. State expenditures would increase by $37.4 million.

Washington’s northern neighbor, British Columbia, implemented a carbon tax in 2008; this served as a base model for Initiative 732.



Excellent idea. Hope that the other 49 States will follow. It is one of the way to increase the price of fossil fuel, accelerate the switch to electrified vehicles and reduce GHG and pollution.

Canada will do almost the same starting at $10/ton CT going up an extra $10/ton per year, to $50/ton by 2022. Revenues will remain with Provinces/Territories to do as they wish.

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