Senate leader is mulling ‘carbon tax’ on vehicle fuels

Senate leader is mulling ‘carbon tax’ on vehicle fuels
Senate leader Darrell Steinberg is proposing a carbon tax on motor vehicle fuel. Above, the 110 Freeway in Los Angeles on the Friday before Christmas.
(Luis Sinco / Los Angeles Times)

SACRAMENTO -- Californians could be paying more for gasoline and other transportation fuels next year as a result of California’s pioneering efforts to curb greenhouse gas emissions that contribute to global warming.

But Sen. Darrell Steinberg thinks that any extra money motorists pay at the pump should be clearly labeled for what it is: a tax.


Steinberg (D-Sacramento) is considering legislation that would slap a so-called carbon tax on fuels and earmark revenues estimated at $3 billion to $4 billion a year to two purposes.

Quiz: Why are California gas prices so high?


About half the money would be put back into the pockets of low- and moderate-income people in the form of a tax credit, similar to the earned income tax credit for the federal income tax.

The rest would fund transit projects to give commuters an incentive not to drive their cars, as well as some environmental projects.

Word of Steinberg’s proposal, which he plans to unveil at a lunch meeting of the Sacramento press club Thursday, spread around the state Capitol on Wednesday. But Steinberg’s spokesmen declined to comment.

People familar with the plan said the idea is to substitute a direct tax paid by consumers for an indirect, less transparent price hike on gasoline, diesel and other fuels imposed by California’s complex “cap-and-trade” auction system. Cap and trade sets limits on pollution and sells credits giving factories, power plants and refineries the right to put more carbon dioxide, methane and other greenhouse gases into the atmosphere.


The Air Resources Board plans to extend the credit auctions to cover transportation fuels Jan. 1, 2015. Steinberg hopes that a straightforward carbon tax would be better received by consumers than the complicated cap-and-trade pricing mechanism, said legislative staffers who were not authorized to speak on the record to reporters.

 But, the proposal is already getting flak even before its details are known.

Some business groups are skeptical. “It ultimately will have a detrimental impact on low-income consumers,” said Rob Lapsley, president of the California Business Roundtable. “They’ll be spending 30% more of their budget on fuel costs.”

Some environmentalists who support cap and trade also questioned the need to remove transportation fuels from the program. “Cap and trade is the preferred approach,” said Derek Walker of the Environmental Defense Fund in San Francisco.


And even fellow Democratic senators questioned their leader’s carbon tax idea. Sen. Noreen Evans (D-Santa Rosa) on Wednesday unveiled a bill to collect an excise tax from oil companies on every barrel pumped out of the ground.

The oil lobby, represented by the Western States Petroleum Assn., immediately denounced the Evans bill, arguing it would put California producers at a disadvantage with sellers of oil from other states and countries.

However, legislative aides that have talked to industry representatives, said the the petroleum association was “neutral” on Steinberg’s bill, meaning it was not actively opposed to it. The association privately had floated a similar tax last year, they said.

Western States’ president, Catherine Reheis-Boyd, said she hasn’t seen details of Steinberg’s proposal. But she said she’s “excited that there’s now a conversation” about the best way to cut carbon emissions from transportation fuels in a way that has the least effect on jobs and the economy. Gasoline, diesel and other fossil fuels account for about 40% of all carbon emissions, she said.

Neither the Steinberg nor the Evans tax measures is likely to have an easy time being passed by the Legislature and signed into law by the governor. Both would need the votes of two-thirds of the members of the state Assembly.

Gov. Jerry Brown publicly has said he does not favor passing any new state taxes this legislative session.



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