Top Five Reasons Connecticut Should Oppose a Carbon Tax
Americans for Tax Reform (ATR) this week released a letter to the Connecticut General Assembly urging legislators to oppose House Bill 7247, an “Act Establishing a Carbon Price for Fossil Fuels Sold in Connecticut.” Connecticut consumers and businesses already face the eighth worst overall state tax burden in the country. The Connecticut carbon tax proposed in HB 7247 would only make matters worse by levying a $15 per ton carbon tax on the state, which would increase $5 annually.
A carbon tax is likely to hinder economic competitiveness in the Constitution State by inflating the cost of energy, in turn negatively impacting businesses, jobs, and the price of consumer goods, thus increasing costs across the board for Connecticutians.
A study by the National Association of Manufacturers, based on a $20 per ton tax rate, explores where the brunt of this misguided legislation will be felt if the tax is implemented. If HB 7247 becomes law, Connecticutians will experience employment loss, increased prices at the pump, and elevated energy bills. Just one year after implementation, with a rate of $20 per ton, Connecticutians can expect the following:
1. Increased Prices at the Pump. In 2016 Connecticut’s gas tax was the 6th highest in the nation, and the proposed carbon tax would only drive that rate higher. In addition to the federal gas tax of 18.4 cents per gallon and the Connecticut state gas tax of 37.51 cents per gallon, HB 7247 would add an additional 20 cents per gallon, totaling up to a 75.9 cents tax per gallon for topping off the tank.
2. Raised Electricity Costs. The cost of natural gas is projected to increase by more than 40 percent in the state, driving up energy costs for residents and businesses. Homeowners would suffer as HB 7247 would cause significant increases to household electricity rates. Such an increase in energy prices would also jolt through the economy raising the costs of consumer goods, an impact that would fall hardest on the state’s low-income residents.
3. Eliminated Employment Opportunities. A $20 per ton carbon tax could deal a blow to employment in Connecticut, with a potential loss of worker income equivalent of up to 9,000 jobs after just the first year, rising above “18,000 jobs by 2023.”
4. Economic Sectors Would Spiral South in 2023. Connecticut economic sectors such as services, energy-intensive manufacturing, and non-energy-intensive manufacturing face an aggregate loss in economic output that could reach a projected 3.2 percent by 2023.
5. Crippled Economic Competitiveness. Connecticut currently ranks as the 43rd worst state on the bipartisan Tax Foundation’s 2017 State Business Tax Climate Index. Implementing HB 7247 in Connecticut would only slow down an already burdened intrastate tax climate. Bordering states would gain more of a competitive edge over Connecticut if HB 7247 were to become law, which would only hinder the state’s competitiveness, and deter business investments in Connecticut further.
If passed, Connecticut’s residents and businesses will see employment loss, economic sectors deteriorate, electricity bills jolt up, and prices at the pump pile up. Lawmakers should oppose House Bill 7247 and protect the residents and businesses in the great state of Connecticut.