Hawaii bill could become nation’s first carbon emissions tax

HONOLULU — Hawaii could become the first state to enact a tax on carbon emissions, but the bill still requires passage by the House and the governor.

A carbon tax proposed by Democratic state Sen. Karl Rhoads was recently passed by the Senate, Hawaii Public Radio reported Monday.


No dollar figure for the tax has yet been specified in the bill’s current draft, which would take effect in 2021, with graduated increases every three years until 2030.

The tax outlined in the bill would be paid by wholesale distributors of fossil fuels, but could be passed on to retailers, utilities and consumers.

Revenue from the carbon tax would be go into six special funds for purposes such as energy security and environmental response.

The House could change the bill or defeat the measure.

University of Hawaii economics professor Michael Roberts said economists from across the political spectrum support a tax on carbon emissions.

“The essential idea is that pollution is bad for society and we don’t pay for it. There’s no price for pollution,” Roberts said.

A carbon tax could nudge individuals and businesses to reduce emissions and accelerate the development of green technologies, Roberts said.

“It would really harness all aspects of our incredibly complex economy to deal with this problem,” he said.

Tom Yamachika, president of the Tax Foundation of Hawaii, said taxes aimed at reducing specific market activity are not a reliable long-term revenue source.

Lawmakers should consider the example of the state’s cigarette tax when considering how to use revenue raised by a theoretical carbon tax, Yamachika said.

The cigarette tax funds the University of Hawaii’s cancer research center, but a decline in revenue since 2013 has forced the university to request additional funding.

“One of the goals of the tax is to be high enough to change people’s behavior. And guess what? It’s working,” Yamachika said. “People are consuming less and so as a result, the amount of money that’s going into the cancer center is going down.”

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