Washington State Slashes Estimate of Carbon Tax Impact
What may become the United States’ first carbon tax would have far less impact on consumer prices than the Washington State Department of Commerce first calculated, the Seattle Times reports.
Washington’s citizens will vote in November on a ballot initiative that would impose an escalating carbon tax on all fossil fuels used in the state, including those burned for power generation. If the proposal wins at the ballot box and is enacted, a state tax will come into effect next July at US$15 per tonne of emissions, jump to US$25 in July 2018, and rise by 3.5% annually thereafter until it reaches US$100 per tonne.
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Supporters say the revenue-neutral tax contemplated by Initiative 732 will help the state reach its climate goals while reducing its sales and some business taxes. Opponents claim the state will lose US$$800 million in revenue, while families will pay hundreds of dollars more for fuel and electricity.
The State Department of Commerce originally sided with the latter estimate, warning that the tax would push up power rates by 20% by 2020. But after a Seattle economist pointed out an error in its calculations, the Times reports, the Department conceded that “the actual impact of the ballot measure would be a 5.3% increase in electricity prices”—about a quarter its initial estimate.
“Washington voters appear closely divided,” over the initiative,” Utility Dive reports, citing “a pair of polls [which] show about 38% in favour of the carbon tax, and 37% opposed.”