Have you seen the ad for the company that will haul away your unwanted junk? “All you have to do is point!” the owner says. We’ve used that company and he’s half right: All you have to do is point and pay. You always have to pay.
It is like that with the various clean energy programs floating around Virginia (and the world) that are touted as saving the planet. They are highly popular with voters because nobody mentions the cost, but when people see what it does to their family or company budget, enthusiasm evaporates.
The Thomas Jefferson Institute for Public Policy demonstrated that this December, with two questions on a recent poll by the respected Mason-Dixon Polling and Strategy. Both focused on the pending Transportation and Climate Initiative (TCI), an interstate compact to reduce carbon dioxide emissions from automobiles, trucks and other internal combustion engines. It is supposed to start in Virginia in 2022.
Virginia has participated in TCI’s planning process, which focused on glowing promises that the result will be cleaner air, improved health and an explosion of clean transportation options. The compact’s details emerged on December 17, finally including information on the cap and tax mechanisms proposed and the overall cost to consumers in the 12 states involved. The next step is for Virginia and the rest of the parties to agree to a memorandum of understanding. Interstate compacts are the purview of the General Assembly and it needs to consider the following.
The first question on the Mason-Dixon poll described the goals of TCI: Improved transportation, a clean energy economy and reduced carbon emissions. Statewide support among the 625 Virginians polled was 61 percent, with only the southwest portion of the state expressing general opposition. Support hit 76 percent in Northern Virginia.
Ah, but the second question changed everything. “If joining the Transportation Climate Initiative meant an additional tax on automotive gasoline and diesel, starting at 18 cents per gallon and rising higher, while reducing the money set aside for road repairs and new road construction, would you support or oppose….”
Support evaporated. Statewide, 58 percent opposed and only 34 percent still supported the program. In politically crucial Northern Virginia, suddenly the voters were split, 44 to 44 with 12 percent undecided. That was the highest regional undecided rate. Looking at the cross tabulations, even 37 percent of self-identified Democrats expressed opposition and another 10 percent were undecided. Independents opposed joining TCI by two to one, 63 to 31.
The polling questions were written before the December 17 detailed release, and the 18-cent-per gallon cost impact was based on rumor. On December 17 it was confirmed that imposing a 25 percent reduction of CO2 on the transportation section in the region would add a cost equivalent to 17 cents per gallon in the first year of the program. For once, rumor got it right.
It won’t be a direct tax at the pump. Fuel wholesalers will have to buy expensive allowances to continue to sell fossil fuels in Virginia, and the amount of allowances available will start to shrink annually. Any claim that the cost of those allowances will not be passed along to the ultimate consumer should be disregarded. The buyers of the fuel will pay for the allowances.
The approach proposed in the draft memorandum of understanding goes well beyond a tax to discourage motor fuels and to encourage more use of electric vehicles or mass transit. The TCI states will also start to ration gasoline and diesel, slowly reducing the supply. In this sector, when they say they want to reduce CO2 by 25 percent, 50 percent, or 100 percent, what they are really saying is they want to ration and then eliminate the fossil fuel products.
Another aspect to the second question – the assumed drop in funding for transportation maintenance and construction – is based on the TCI compact’s goal to reduce overall sales of gasoline and diesel fuels. The excise taxes on both remain major sources of funds for the transportation budgets of the states and reducing sales also would lower related federal revenues to those states.
The billions of dollars to be generated by TCI, more than $60 billion over ten years in the total region, will be focused on subsidizing electric vehicles, mass transit, and alternatives such as bike lanes and walking trails. There will be efforts to reduce the impact on low-income residents. The long-term goal is to prepare for elimination of fossil fuels.
Governor Ralph Northam embraced the TCI compact more than a year ago but then went silent. The 2019 General Assembly’s Republicans — then in the majority – put a bill on his desk to prevent our joining TCI, which the Governor promptly vetoed, sustained on a party-line vote. This idea is coming our way.
–Stephen D. Haner is senior fellow for state and local tax policy with the Thomas Jefferson Institute for Public Policy. Contact him at [email protected]. A version of this commentary originally appeared in The Richmond Times Dispatch on December 27, 2019.