Bipartisan House Bill Would Tax Carbon, Create Carbon Tariff
The Market Choice Act, which would end fuel taxes while imposing a carbon tax, was reintroduced in the House of Representatives this month by Reps. Brian Fitzpatrick, R-Pa., and Salud Carbajal, D-Calif. The bill, an acronym for "Modernizing America with Rebuilding to Kickstart the Economy of the Twenty-first Century with a Historic Infrastructure-Centered Expansion Act," would require domestic producers to pay a price for carbon, and also would place a tariff on imports if those countries don't have equivalent carbon taxes. It would provide a rebate to manufacturing exporters and sectors that process ores, soda ash and phosphate. It wouldn't cover mining and fossil fuel extraction.
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The tariffs wouldn't cover least developed nations, or countries "responsible for less than 0.5 percent of total global greenhouse gas emissions and less than 5 percent of global production in the eligible industrial sector," the bill's text says.
Domestic carbon taxes would be imposed on coal mining, coal processing, refineries, cement production, petrochemical production, iron and steel production and metallurgical coke production, lime production, ammonia production, aluminum production, soda ash production, ferroalloy production, phosphoric acid production, glass production, zinc production, lead production, magnesium production and processing, nitric acid production, adipic acid production, semiconductor manufacture and electrical transmission and distribution.
The administration would have one year after passage to promulgate regulations on what products have to pay a carbon border tax adjustment, as well as how to calculate the rate, how the determinations can be appealed, the entry process for those goods, and on what procedures could "prevent circumvention of the carbon tax liability for covered goods that are manufactured or processed in more than one foreign country."
The sectors covered would have to have a trade intensity of at least 15%, calculated by adding the value of imports and exports divided by the value of domestic production plus imports.
The revenues from both the domestic carbon tax and the tariffs would offset the elimination of the aviation fuel tax and gas tax, and would underwrite more infrastructure building.
In a press release announcing the reintroduction of the bill, Fitzpatrick said climate change and inadequate infrastructure need a long-term solution.
Former Republican Rep. Francis Rooney of Florida said, "I applaud Congressman Fitzpatrick for his continued leadership of the MARKET CHOICE Act. It is time for Congress to stop approaching climate issues with makeshift policies like subsidies and further enlarging the regulatory morass. The existing balkanized system favors special interests with distorted markets and protectionist policies that stifle innovation and consumer choice. A border-adjusted carbon tax, like Congressman Fitzpatrick's bill, is the type of market-based approach to climate policy that can achieve our decarbonization goals and maintain our economic edge."
Ben Pendergrass, vice president of government affairs at Citizens’ Climate Lobby, said the group "welcomes" the reintroduction of the bill. "A steadily rising fee on carbon pollution continues to be one of the most effective policies available to reduce carbon emissions,” Pendergrass said. “The MARKET CHOICE Act utilizes this critical tool to build a cleaner, healthier America. We’re encouraged to see that the starting price and rate of increase specified in the bill continue to be more ambitious than in original iterations of the legislation -- that is an appropriate response to the increasing climate impacts Americans face.”