GST Testimony Against Carbon Tax

Feb 27, 2019 by

GST Testified against HB735, which would implement a carbon tax.
The bill establishes the required payment of a carbon pricing fee to be paid by vendors of carbon-based fuels based on their emissions factors. Click here for status information and a link to read the bill.

The NH House Science & Technology Committee met on 1/30/19 to hear testimony on HB 735.
GST Secretary Dan McGuire offered the following statement.
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We urge you to recommend HB 735, the carbon tax bill, inexpedient to legislate.
Many good points were brought up at the public hearing today, but here are three additional ones:

UNCONSTITUTIONAL
This bill taxes motor vehicle fuels but does not spend the resulting funds on road construction and maintenance as part 2 article 6-A of the NH constitution requires:

[Art.] 6-a. [Use of Certain Revenues Restricted to Highways.] All revenue in excess of the necessary cost of collection and administration accruing to the state from registration fees, operators’ licenses, gasoline road tolls or any other special charges or taxes with respect to the operation of motor vehicles or the sale or consumption of motor vehicle fuels shall be appropriated and used exclusively for the construction, reconstruction and maintenance of public highways within this state, including the supervision of traffic thereon and payment of the interest and principal of obligations incurred for said purposes; and no part of such revenues shall, by transfer of funds or otherwise, be diverted to any other purpose whatsoever.

The mere fact that HB 735 uses the word “fee” rather than “tax” is insufficient to satisfy the constitution. Also, note that even if the tax is restricted to electricity and fuels used for heating there would be issues with plug-in electric vehicles and people using diesel fuel for heating (diesel is interchangeable with heating oil) to avoid tax.

EXCESSIVE
As the fiscal note shows, the amount collected by HB 735 starts at $300M annually, rising to over $2B annually in 2030 and beyond. By comparison, the state’s entire general fund plus education fund is only about $2.5B each year. Business taxes are only $750M of that, and our other taxes are much smaller. Even just the 5% administrative cost of this plan, over $100M a year in 2030, would be on a par with such significant taxes as liquor revenue, the interest & dividends tax and lottery revenue. A new tax of this magnitude would have disastrous consequences for our reputation, our business climate and our citizens.

INEFFECTIVE
As a member of the House Finance Committee I worked on the state budget for six years. It is the established practice of the state that while taxes listed in statute are very real, spending RSAs (like the 70% rebate in HB 735) are suggestions, subject to higher priorities and changeable by HB 2, for example using the words “notwithstanding RSA 339-H:5…”. We would be surprised if the spending priorities in this bill survived even one budget cycle.

Dan McGuire, Secretary
Granite State Taxpayers
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Click here to find your Legislators. Tell them to oppose HB 735!

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