French riots force Macron to retreat
The turmoil sparked by French President Emmanuel Macron’s proposal to boost gas taxes is just the latest example of an emerging political truism: While economists hail them as the best, most efficient and most effective way to limit greenhouse gas emissions, green taxes are proving a tough sell for politicians who have to work and win elections in the real world.
The climbdown by Mr. Macron’s government — delaying for at least six months planned gas tax hikes in the face of the worst Paris street riots in 50 years — is just the latest retreat for green-oriented governments in North America, Asia and Europe. The long-term benefits of lower carbon emissions tend to get swamped in the polls by the immediate pain of higher costs at the gas station and on the home heating bills.
President Trump weighed in on Twitter on last Tuesday evening, saying the Paris demonstrators and the Macron government have come around to his way of thinking on the dubious wisdom of higher fuel taxes as a way to fight climate change.
The global climate deal signed in Paris — and rejected last year by Mr. Trump — “is fatally flawed because it raises the price of energy for responsible countries while whitewashing some of the worst polluters …,” Mr. Trump tweeted. “American taxpayers — and American workers — shouldn’t pay to clean up others countries’ pollution.”
The debate presents a classic clash between theoretical elegance and political pragmatism.
Led by Paul Romer, who won the 2018 Nobel Economics Prize for his work on integrating climate change into macroeconomic analysis, top economists argue that the argument is straightforward: The quickest, most efficient way to reduce carbon production is to tax it and force the market to find cheaper, cleaner alternatives.
“Tax the usage of fuels that directly or indirectly release greenhouse gases,” said Mr. Romer, a former chief economist with the World Bank. “People will see that there’s a big profit to be made from figuring out ways to supply energy where they can do it without incurring the tax.
“The problem is not knowing what to do,” Mr. Romer recently told a Canadian radio station. “The problem is getting a consensus to act.”
Critics are everywhere, even in places as unexpected as leading environmental groups, including the Sierra Club, which has objected to carbon tax proposals that return some of the proceeds to taxpayers. It argues that the money should be earmarked for clean energy projects.
Politicians face the largest stumbling blocks in avoiding the fears of everyday citizens that new taxes will crush them, policymakers say. Higher gas and home heating taxes also tend to fall on rural and workingclass voters who rely on cars more than their urban compatriots. That argument factored heavily in France’s “yellow vest” protests against Mr. Macron’s proposed diesel tax hike, which exploded into France’s largest riots in decades.
“It’s pressure that’s been building for some time, not just in France but abroad,” said H. Sterling Burnett, senior fellow at the free-market Heartland Institute.
He echoed Mr. Trump’s suggestion that the Macron government is proving to be out of touch with the French people.
“Nothing reveals the disconnect between ordinary voters and an aloof political class more than carbon taxation,” the conservative Wall Street Journal wrote in an editorial this week.
Some carbon tax skeptics are so convinced of the idea’s political toxicity that they are pre-emptively moving to strike it down.
House Majority Whip Steve Scalise, Louisiana Republican, and Rep. David B. McKinley, West Virginia Republican, last summer proposed a nonbinding resolution to condemn all carbon taxes. It passed by a 229-180 vote.
“I think the case is very clear by anybody who’s looked objectively at what a carbon tax would do to the economy,” Mr. Scalise argued on the floor of the House at the time. “It would be devastating to our manufacturing base, it would kill jobs, and I think most devastating, it would rise in increased cost for families all across this country.”
The world reacts
Once seen by governments as a possible way to spur the development of cleaner energy sources while filling their coffers, carbon taxes are increasingly the source of short-term social combustion.
Last week, inspired by the French “yellow vests,” demonstrators in Belgium took to the street in a similar movement.
Prime Minister Justin Trudeau’s plan to impose a federal carbon tax on Canadian provinces has also recently been greeted by significant political headwinds, and questions of whether Ottawa had the authority to levy such a tax in the first place.
“Governments around the world, including Canada’s, sold us on the idea the magic beans of carbon taxes would save our planet from climate change, while we made trillions of dollars doing it,” Toronto Sun columnist Lorrie Goldstein wrote this week, “except it hasn’t worked out that way.”
Perhaps the most striking cautionary tale came in Australia, where the Labor government introduced a carbon pricing scheme in July 2012. Resistance to the idea was so strong that it was repealed just over two years later.
In a subsequent analysis, the Center for Public Impact wrote: “The government that introduced the policy failed to sell it, while its critics portrayed it as a burden that would hurt businesses and cost households. So even though public support — along with concerns for climate change — increased over time and the scheme was succeeding in reducing emissions, it failed to get the support it needed.”
Critics say the popular skepticism is amply justified.
“Gasoline taxes are one of the most regressive taxes a government can impose, because everyone buying gas pays the same price regardless of income,” Merrill Matthews, resident scholar with the Institute for Policy Innovation, said noting the chaos and policy confusion in France.
Experiment in Washington
In the U.S., the political viability of carbon taxes has been put to the test — and found wanting — repeatedly in Washington state.
State voters there last month considered yet another ballot question proposing to place a carbon fee on fossil fuel emissions, the third such effort proposed for the state.
The proposal triggered the largest ballot measure spending spree in Washington state’s history and included high-profile endorsements from Microsoft co-founder Bill Gates, who donated $1 million to the campaign supporting the tax.
Supporters hoped to institute the first state-level carbon fee, which would have taken effect in 2020. All revenue generated was to be overseen by governor-appointed board as well as the state’s utilities.
But opponents also mobilized against the idea.
CNBC reported that the Western States Petroleum Association solicited $31.2 million from oil companies and business groups against the idea — a record amount for a Washington state ballot initiative, according to state records.
In the end, voters in the politically liberal state rejected the idea 57 percent to 43 percent.
In 2016, Washington state voters rejected a similar ballot initiative that proposed a carbon tax alongside a cut in the state sales tax in an effort to ease the financial bite on citizens. That ballot measure lost 59 percent to 41 percent.
Despite the historical record, green activists say they have not given up on the carbon tax idea. Democratic gains in Congress and in statehouses across the country have sparked renewed talk about the idea, according to Inside Climate News.
Demonstrators set a fire near the Arc de Triomphe in a protest against rising taxes and President Emmanuel Macron’s other policies.
French President Emmanuel Macron was at the Group of 20 summit during the worst street riot in Paris in 50 years.