HAWAII SWAMPED BY CARBON-DIOXIDE TAX BILLS

by Timothy Benson, Heartland.org, April 2, 2019

Multiple carbon-dioxide tax bills are under consideration in the current session of the Hawaii State Legislature.

The purpose of a so-called carbon tax is to decrease carbon-dioxide emissions by levying a tax based on the amount of emissions produced.

Multiple Proposals, All Expensive

Hawaiians already pay more for electricity than residents of any other state, at 26.05 cents per kilowatt hour, the U.S. Energy Information Administration reports. Hawaii’s retail electric rates are 148 percent higher than the national average.

H.B. 1579 would establish a flat $15-per-ton tax on carbon-dioxide emissions from the use of fossil fuels, starting in 2020. H.B. 1287 would impose on fossil fuel distributors a $20-per-ton tax on carbon dioxide emissions beginning in 2020, increasing by $5 per ton until 2034, when it would be capped at $55 per ton. Neither H.B. 1579 nor H.B. 1287 made it out of committee.

A third bill, S.B. 1463, has already passed the Senate and was still active in the House at press time.

New Range of Taxes

S.B. 1463 would replace Hawaii’s $1.05 per barrel “environmental response, energy, and food security tax” on petroleum products other than jet fuel and any fuel sold to a refiner, with a range of taxes on every type of fossil fuel used in Hawaii.

The bill would impose a tax of 3.6 cents per gallon on propane; 4.2 cents per gallon on butane; 6.35 cents per gallon on home heating and diesel fuel; $13.13 per ton on coal; 33.2 cents per thousand cubic feet on natural gas; 5.56 cents per gallon on gasoline; 5.98 cents per gallon on jet fuel; 7.47 cents per gallon on oil used to make and seal asphalt and roads; 6.7 cents per gallon on lubricants; 7.01 cents per gallon on petrochemical feedstocks; and $16.35 per ton of municipal solid waste; with a variety of other fuels not specifically listed being taxed at $6.25 per ton of carbon dioxide emissions.

S.B. 1463 would make Hawaii the first state in the country to pass a carbon-dioxide tax.

‘Bait-and-Switch’

The carbon dioxide tax proposals are less about reducing emissions than raising revenue and directing residents’ energy choices, says Keli’i Akina, Ph.D., president of the Grassroot Institute of Hawaii.

“The outward intent of S.B. 1463 is to reduce greenhouse gas emissions by putting a ‘price on carbon,’ but that’s only part of the story,” said Akina. “The real effect would be to replace the state’s already high fuel tax with a complex tax scheme that lacks transparency and would cost Hawaii residents dearly.

“If passed into law, this bill would let legislators pat themselves on the back for their environmental stewardship at the same time as they hike electric bills and increase the cost of living,” Akina said. “It is nothing more than a bait-and-switch, something designed to supposedly be ‘revenue neutral’ for the government but which would be economically damaging to the average Hawaii resident.”

Hitting the Poor the Hardest

Testifying before a joint hearing of the Hawaii Senate Committees on Ways and Means and the Judiciary, Scott Seu, senior vice president of public affairs for the Hawaiian Electric Company, the state’s largest electricity supplier, said S.B. 1463 would raise customers’ electricity costs by $19 million a year.

“Any consideration of a carbon tax needs to be done thoughtfully and with full view into how such a tax would achieve desired results without unintended negative consequences, especially with respect to low to moderate income customers,” Seu testified. “These are the people who are least likely to have solar systems on their roofs or electric vehicles in their garages, meaning they would be hit the hardest with a carbon [dioxide] tax.

“Conversely, those customers who can afford these alternative energy options would likely pay the least amount of carbon [dioxide] tax,” said Seu.

Higher Cost of Living

In his testimony before the joint Senate committee hearing, Thomas Yamachika, president of the Tax Foundation of Hawaii, expressed doubt that low-income Hawaiians will be able to cover their basic expenses if S.B. 1463 becomes law.

“Will their paychecks be enough to pay the rent, keep the lights on, or feed the family?” asked Yamachika. “If the cost of simply driving to work from the suburbs is horrible now, just wait until the tax kicks in.

“And if you think the hammer of a carbon tax will fall most heavily on huge, faceless corporations like the electric company, the airlines, or the shippers, think again [because] businesses can and will pass on any enhanced costs to their consumers if they hope to continue providing their products or services,” Yamachika said. “That means our already astronomical cost of living could head further up into the stratosphere.”

S.B. 1463 would raise energy costs by forcing residents and businesses to purchase electricity from renewable energy sources, says George Jamerson, director of government relations at The Heartland Institute, which publishes Environment & Climate News.

“S.B. 1463 will raise the costs of fossil fuels in order to force consumers to use expensive renewable energies such as wind and solar,” said Jamerson. “This will have negative consequences for residential energy consumers and energy-intensive industries alike. And as with all regressive taxes, low-income communities will be disproportionately affected.”

Timothy Benson (tbenson@heartland.org) is a policy analyst with The Heartland Institute.

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