The Spokane business community potentially could lose coveted manufacturing jobs if a statewide carbon tax is created. That’s a risk that voters shouldn’t take, and because of this, they should reject Initiative 732.
Being better stewards of the environment is important, and industry should continue pushing itself to develop environmentally friendly innovations. In recent years, many Spokane-area companies have made strides in reducing their carbon footprints, and businesses should remain vigilant in that endeavor.
But I-732 isn’t the answer. If passed, the measure has the potential to place businesses statewide at a competitive disadvantage. Out-of-state competitors, including those located across the state line in Idaho, can produce more—and emit more greenhouse gasses—with impunity.
Kyle England, Kaiser Aluminum Corp.’s senior manager of human resources and external affairs, told the Journal that the company could lose capacity with a carbon tax in place, and thereby lose business to its global competitors. That could result in job losses at Kaiser’s Trentwood plant, which employs more than 900 people.
In fairness, economist Yoram Bauman, founder and co-chairman of Carbon Washington, and his colleagues should be credited for developing an initiative that attempts to take into account the impact a carbon tax would have on business.
The carbon-emission tax would start at $15 per metric ton of carbon dioxide for the sale and use of certain fossil fuels and electricity generated from fossil fuels. That would increase to $100 per metric ton over time, with a more gradual phase-in for some users. Also, residents would pay 25 cents more per gallon for gasoline and a fraction of a cent more for electricity.
To offset that, the sales tax rate would be reduced and the unpopular business-and-occupation tax nearly would be zeroed out for some businesses. Also, a working-family tax exemption would be expanded.
Bauman contends those concessions should offset the carbon tax. One variable that remains unknown is just how much individual businesses are paying in B&O tax and whether the reduction truly would be enough to offset a carbon tax.
In terms of the proposed tax shift’s effect on the state budget, Carbon Washington and its detractors are at odds over whether it would be substantial. Carbon Washington says I-732 is revenue neutral. Opponents counter that by citing a Washington state Office of Financial Management estimate that the measure would decrease the state’s revenue by $892 million during its first six years, if approved.
The state is budgeted to spend nearly $40 billion in the current biennium, so $892 million over six years isn’t devastating. Even so, in an era during which legislators are grappling to fund basics such as education, even a small loss in revenue is a step in the wrong direction.
But the bigger issue is preserving family-wage manufacturing jobs, the kind of jobs that economic developers covet and struggle to attract and retain due to other states’ abilities to offer more alluring incentives. The state shouldn’t stack the deck against itself further with a carbon tax.
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