Formed last year after the United States withdrew from the Paris Climate Accord, the Alaska Climate Action Leadership Team is set to present a retaliatory draft climate plan to Governor Bill Walker this Thursday. Tucked away on page forty-three of their proposal, is a carbon tax that is more hot air than sound policy. Gov. Walker must reject his own advisory board’s proposal to adopt a state-level carbon tax.
The proposal calls for research and development of a carbon tax system, where “if possible most carbon taxes are levied ‘upstream’ at the location where the carbon-based fuel is either taken out of the ground or brought into the jurisdiction.” The price of the taxed products will rise for consumers, pushing them to use less, pay more, or switch to non-carbon alternatives.
From the get-go, the proposal falls flat. A portion of the government’s new revenue will be used to offset heating and energy cost increases for rural residents in the state. With 34% of Alaskans living in rural areas, a good portion of the carbon tax revenue will be used to subside the victims of the tax itself.
Proponents argue that Alaskans will not bear most of the cost, which is partially true.
Alaska produces substantially more oil than it consumes, so the financial burden of the carbon tax will be spread nationwide, felt most by middle and lower income families, as well as small businesses that use carbon-based products that originate in Alaska.
The Climate Action Leadership Team ignores, however, the indirect cost of the carbon tax on Alaskans families. As domestic energy costs rise, the profitability and competitiveness of the Alaskan energy-production industry decreases, negatively affecting every last Alaskan citizen.
Each year, the Permanent Fund Dividend Division of the Alaska Department of Revenue cuts a check to each Alaskan citizen for a share of profits of oil extracted from public land—the amount was $1,600 in 2018. An Alaska carbon tax would reduce this amount.
Proponents of the proposal do acknowledge that not all elements of the carbon tax would be ‘upstream,’ leaving the Alaskan consumers to face some indeterminate tax increase felt only within the state. This is common sense: if you impose a tax on energy production, there are downstream impacts on every day products used by consumers.
In an election year, this is a hot political issue for Governor Walker. Rather than focusing on the political impact of a carbon tax, Gov. Walker should think long and hard about the consequences for his constituents, ranging from higher heating costs to higher utility bills and even costlier groceries. A carbon tax would take money out of the pockets of all Alaskans, with the cost harming most those who could handle it least.