Roper: ESSEX carbon tax robs poor to pay rich

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Roper: ESSEX carbon tax robs poor to pay rich

Thu, 02/22/2018 - 4:45am -- tim

by Rob Roper Chris Miller, who works on the Social Missions Committee at Ben & Jerry’s, testified to the House Energy & Technology Committee that his company is firmly in favor of the carbon tax bills (H791/S284) based on the ESSEX Carbon Tax plan. Why? Because under the legislation, Ben & Jerry’s, which is owned by the British/Dutch company Unilever, will pocket an estimated $832,000 in electricity subsidies while avoiding the tax almost completely.

The way the ESSEX Carbon Tax works is distributors of fossil fuels will pay an excise tax of 32 cents per gallon for gasoline, 40 cents for diesel and heating oil, and 24 cents for propane and natural gas. This cost, which will be passed along to customers, will go into a special fund that will be handed over to Vermont’s electricity providers in order to subsidize electric bills. Ben & Jerry’s uses a lot of electricity and very little fossil fuels. Miller explained that the ice cream manufacturer’s Vermont plants are almost entirely electric, and the company subcontracts its shipping needs to trucking companies based mostly outside Vermont. These subcontractors, Miller said, would likely never fill their tanks in Vermont, thus avoiding the carbon tax, and not incurring any cost that would be passed along to Ben & Jerry’s.

This is great for ice cream giant because they are part of a well-capitalized, multi-national corporation that has the resources to invest in the latest technology, and the geographic flexibility to best position itself to take advantage of government policies like the ESSEX plan. As such, they are able to extract much from the subsidy pool, while putting next to nothing in.

But, there is another side of this coin (many coins, actually) that ESSEX Carbon Tax supporters fail to mention, and that is the Vermont businesses, perhaps less capital rich and without the flexibility of scale, that will end up paying a lot into the pool but take out little. Who? Businesses that do rely on fossil fuels, such as plumbers, electricians, contractors who depend on trucks and vans to reach their customers, the general store that has been around since 1850, heats with oil, and isn’t well insulated, etc. and so on. It’s folks like this who are going to be forced to pay $832,000 worth of Ben & Jerry’s electric bill.

It is also important to note that because Ben & Jerry’s is already fully invested in non-fossil fuel and efficiency technologies, the $832,000 in subsidies paid to them would do nothing further to reduce Vermont’s carbon footprint. Ben & Jerry’s is already as low as it can get. The ESSEX subsidy would just be a taxpayer funded gift to one of the state’s wealthiest business financed by many of its poorest. Is this fair? Is it smart?

This same dynamic will play out on the individual level. Under the ESSEX Carbon Tax the mom in the used minivan will end up subsidizing through her gasoline purchases the electricity bill of the hedge fund manager in the brand new, $80,000 Tesla. 

Even though the ESSEX Carbon Tax includes a rebate program for low-income and rural Vermont households, Rep. Sarah Copeland-Hanzas (D-Bradford), lead sponsor of the House version of this bill, confessed that a hypothetical single mother living in a rural part of the state (someone qualifying for the maximum amount relief) would still have to invest in an electric vehicle, electric heat pump, or some such thing in order to come out ahead under the ESSEX Carbon Tax. If said single mom doesn’t have or cannot find the financial capital necessary to do this, the scheme will be a net drag on her financially.

However, wealthy Vermonters who do have the financial wherewithal to install solar panels, buy Priuses, and live in newer, better insulated housing can take full advantage of the ESSEX plan, the subsidies they receive provided courtesy of Rep. Copeland-Hanzas’ single mom.

During a meeting of the Vermont Climate Caucus, a group of environmentally focused law makers, one member raised this concern, “It seems to me that if you’re among the most wealthy Vermonters you could easily save a lot more than lower income [Vermonters], because if you have fossil fuels heating your home you can go out and buy a pellet stove, you can go buy heat pumps, you can go buy a Tesla, and you won’t even notice the bump in your budget… You’re reaping all the benefit. How is this helping lower income Vermonters?” Sen. Chris Pearson (D/P- Chittenden), lead sponsor of the senate version of the bill, responded, “Yeah, it would be a good problem to have if wealthy people stopped using fossil fuels to heat their homes and drive around. I mean, that is the goal.”

Is it? Well, thanks for letting us know.

Rob Roper is president of the Ethan Allen Institute. He lives in Stowe.