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House Energy Chairman Proposes US Carbon Taxes

by Leroy Baker,, New York

28 September 2007

US Congressman John D. Dingell (D-MI), Chairman of the influential House Energy Committee, has proposed a range of taxes to punish carbon emitting industries and activities, with new revenues to be diverted into various spending programmes.

“In order to reduce greenhouse gases and make the planet safe and healthy for future generations it will take a significant investment from all of us,” Dingell commented on Thursday, as Secretary of State Condoleezza Rice launched a new US-driven multilateral initiative to find ways of encouraging the use of cleaner fuels.

“A fee on carbon emissions requires a tithe from all citizens and industries, but no one entity will be unfairly leveled with a devastating burden. More importantly, it provides an incentive for change in our economy and our way of life," he argued.

However, Dingell's proposals are unlikely to sit comfortably with a White House resisting Democratic efforts to raise taxes, and are far removed from what the administration likely has in mind to discourage the use of fossil fuels.

With Bush already resisting a proposal for a 5 cent per gallon increase in gas tax to boost funding for the highways trust fund in the wake of the Minneapolis bridge collapse, perhaps the most controversial element of Dingell's plan is a 50 cent per gallon tax on gasoline, jet fuel, kerosene and other petroleum-based fuels, phased in over five years, with exemptions for diesel and biofuels. The legislation would also impose a $50 per ton levy on carbon emissions from coal, petroleum and natural gas, again phased in over five years.

Another controversial feature of Dingell's legislation is the phasing out the mortgage interest deduction on large homes, which he argues consume unreasonable amounts of energy, and are consequently a large contributor to climate change.

Under this measure, mortgage interest would be phased out on primary mortgages for houses with an area of more than 3,000 square feet. Exemptions would be provided for historical houses (those built before 1900), farm houses, and for home owners who purchase carbon offsets to make their home carbon neutral or own LEED certified homes.

"These homes have contributed to increased sprawl and longer commutes," he stated. "Despite new homes in and of themselves being more energy efficient, the sheer size, sprawl and commutes lead to dramatically more energy use – or to put it more simply, a larger carbon footprint."

Dingell has stated that revenues raised from this tax would go primarily towards expanding the Earned Income Tax Credit, with revenue from the gas tax going into the highway trust fund. The revenue from the tax on jet fuel would be ploughed into the airport and airway trust fund.

Meanwhile, the fee on carbon emissions would help fund several spending programs, Dingell stated. These would include Medicare and Social Security, Universal Healthcare, the State Children’s Health Insurance Program, conservation projects, renewable energy research and development and the Low Income Home Energy Assistance Program.

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