Friday, 6 March 2015

Carbon Tax Proposed for New York State

The Network for Sustainable Financial Markets (NSFM) last week proposed a New York State Carbon Tax and Refund policy, which would place a sales tax on fossil fuels produced or distributed in New York State. Revenues would be repaid to consumers and producers through income tax refunds. The proposed policy, which has proven successful in other locations, is to send a price signal to consumers and producers that pollution is costly, thereby changing consumer and producer behavior. NSFM is currently building a coalition among the political, business, and activist communities.

A carbon tax gradually imposed on crude oil and gasoline in New York State, at a rate equivalent to $30 per metric ton of carbon dioxide emitted, would generate revenue while addressing climate change. The tax would provide approximately over $3.3 billion a year in new net state tax receipts, to be remitted back to households and corporations via tax refunds. This carbon tax rate of $30 can be compared to the social cost of carbon, which falls at $57 per metric ton of CO2 at a 2.5% discount rate. The carbon tax policy would complement the existing Regional Greenhouse Gas Initiative, which has reduced power plant CO2 emissions through a cap-and-trade system.

British Columbia in Canada set a precedent for a carbon tax in North America. The BC tax began at C$10 in per metric ton of carbon dioxide emitted and has increased by C$5/ton annually to C$30/ton. The BC carbon tax is revenue neutral, so that carbon tax revenues are returned through tax cuts.

New York residents demonstrated their position against climate change in the People's Climate March in September 2014 in New York City, which drew in over 400,000 people. New York State Executive Order Number 24, laid out by New York Governor David Paterson in 2009, sets forth the goal to reduce greenhouse gas emissions in the state by 80% of 1990 levels by 2050. This would amount to about 40 million metric tons. CO2 levels reached 187.57 million metric tons in 2010, but New York State will in fact not reach a level of CO2 emissions 80% below 1990 levels by 2050 if the state does not take serious action.

Reorienting spending toward more labor-intensive industries outside of the fuel sectors would result in job creation and economic growth. The residential sector alone would generate $276.96 million net of the direct impact of the tax. While a carbon tax is predicted to generate revenue, switching spending from capital-intensive fossil fuel industries to labor-intensive consumer industries, failing to implement economic policies to reduce the impact of climate change will have serious economic consequences. During Hurricane Sandy, the New York City metro area lost 32,000 jobs in the immediate aftermath of the storm. Post- hurricane Sandy, Governor Andrew Cuomo was quoted in the New Yorker stating that, "Climate change is a reality… it is a reality that we are vulnerable."

SOURCE Network for Sustainable Financial Markets

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