Americans support revenue-neutral carbon tax
A poll taken in April found that an overwhelming majority of Americans are in favor of shifting the tax burden onto carbon emissions. Germany implemented a similar taxation scheme from 1999-2003, and the results were impressive. At the same time, the study also shows that Americans are not even thinking about allowing citizens to make their own renewable power.
As anyone following the political debate in the United States knows, new taxes are a hard sell, but a poll taken by Yale's Project on Climate Change Communication (PDF) found that a large majority of Americans would support environmental taxation, which is defined as a shift of taxes towards consumption with an environmental impact – without increasing the overall amount of taxation. Specifically, coal, oil, and natural gas would be taxed, and that revenue would be used to lower taxation in the same amount elsewhere. The study even found that a majority of Republicans support the idea: 51 percent, compared to only 25 percent of Republicans who oppose it.
Germany implemented such a policy from 1999-2003. Called the "eco-tax" (Ökosteuer), it added a few cents to the price of a gallon of gasoline each year; over those five years, the tax amounted to roughly 17 cents per gallon. Incremental implementation was crucial to the tax's success, as people needed time to be able to react to planned hikes in fuel prices. This "signal effect" was considered one of the main benefits in the policy, as people took higher fuel prices into account when purchasing new cars, heating systems, etc., but no one faced considerably higher fuel prices overnight.
The tax applied to all sources of fossil fuel. Importantly, it was also revenue-neutral. While it took Germans some time to get used to the idea, the revenue was not devoted largely to, say, funding renewable energy, but to a completely unassociated field: payroll taxes. In other words, the carbon tax was used to lower the cost of labor in Germany. The tax still applies in Germany, though it has not been increased further since 2003. For an overview, see this report from 2005 (PDF).
One of the main campaigning organizations behind Germany's eco-tax was Green Budget Germany, which continues to campaign for environmental taxation within the EU. One good place to start for further information from the United States is the Vermont Law School's Environmental Tax Policy Institute.
One question not even asked
The study is revealing for another reason: it shows how Americans do not even realize they could be making their own green energy – and we are not talking about domestic production by US firms, but rather citizen and community ownership of solar panels and wind turbines. Nowhere does the study asked how many Americans would like to be able to make their own green power, for instance, though the study does contain a question about "requiring electric utilities to produce at least 20 percent of their electricity from… renewable energy sources."
The study therefore seems to assume that the only way to switch to renewables is by forcing utilities to switch. The only other options discussed are things like governmental funding for research into renewables and tax rebates for purchases of solar panels and efficient vehicles. Feed-in tariffs, the most effective and successful policy for the appointment of renewables worldwide, are not mentioned as an option. (Craig Morris)
