Last week, CalChamber’s tax and privacy guru Sarah Boot wrote about her surprise that a California legislator would introduce a “carbon tax” bill that proposes replacement of the California Sales and Use Tax with a tax on the sale of retail goods based on their respective “carbon intensity.” She’s right to be surprised. When most people talk about a carbon tax, they do so in the context of regulating emissions from stationary facilities, where the debate is over two types of emission reduction techniques: a tax on emissions of carbon (commonly referred to as a carbon tax) or cap-and-trade, a system of market-based controls that can be extended beyond California’s borders.
Consistent with its goals to make a global impact on greenhouse gas reduction, California has repeatedly chosen cap-and-trade as the preferred mechanism, implementing a cap-and-trade system through the Global Warning Solutions Act of 2006 (AB 32, Nunez/Pavley) and extending that program through 2030 via AB 398 (E. Garcia, 2017), which was backed by a mix of Democrats, Republicans, environmentalists and businesses. California’s cap-and-trade program continues to obtain emissions reductions to help the state reach its ambitious 2030 climate goals, with $6.1 billion appropriated to state agencies since 2014 and predicted emissions reductions of over 23 million metric tons of carbon dioxide equivalent (CO2e). These costs are added to the cost of goods produced at cap-and-trade facilities in the Golden State.