Senator Janet Nguyen Votes Against Cap-and-Trade Tax Increase On Californians

Tuesday, July 18, 2017

Yesterday, California State Senator Janet Nguyen voted to protect Californians from yet another tax increase by casting a “No” vote on Assembly Bill 398.  This bill would extend the state’s cap-and-trade program, thereby increasing the price of gas alone, anywhere from $.15 cents to $.63 cents per gallon in 2021, and up to $.24 cents to $.73 cents per gallon by 2031.

“Californians already pay some of the highest taxes in the nation and yesterday, the State Legislature voted to yet again increase taxes on hard-working Californians,” said Senator Janet Nguyen. “When I cast the vote against this bill, I thought about the impact it would have on families who are already struggling to pay for gas to get to work, to get to the doctor’s office, or to put food on the table. I cannot support policies like this that put a strain on already limited budgets and hamper our working families’ ability to thrive.”

In 2006, the California State Legislature established the cap-and-trade program with the passage of the California Global Warming Solutions Act, which required the Air Resources Board (ARB) to reduce statewide greenhouse emissions to 1990 levels by 2020. This goal was to be accomplished through the use of emissions trading programs, also known as cap-and-trade, in which the government sets a “cap” on carbon dioxide emissions, then auctions or gives away permits to companies to produce a set amount of emissions. Since some companies produce more pollutants than others, the government also created a market for companies to “trade” permits.

“As a result of these trades, the cap-and-trade program has essentially functioned as a tax on energy that is passed on to consumers. Additionally, some have argued that the program has done little to reduce greenhouse gas emissions as it originally intended,” said Senator Janet Nguyen. “To make matters worse, the California Global Warming Solutions Act proceeds have been applied to the failed high-speed rail project that has already wasted taxpayer dollars and has surpassed its set budget by more than $20 billion.”

Setting these criticisms aside, the State Legislature has sought to extend the cap-and-trade program through 2031 with the passage of AB 398. As part of the extension, AB 398 would allow the sale of unlimited allowances at a price established by the ARB. Currently, the ARB may only sell a specified number of allowances, which declines every year in order to meet emission reduction targets. This bill allows ARB to sell unlimited allowances if the auction prices hit the ceiling price established by ARB, meaning that greenhouse gases can be emitted as long as businesses are willing to pay.

This is the second time this year that the Democratic Party-led State Legislature has voted to increase gas taxes on Californians.  In April 2017, the legislature passed Senate Bill 1, a historically large state tax on gasoline, which will increase gas prices by 12 cents per gallon starting in November and up to 17 cents per gallon in 2019. When adding the state gas tax (SB 1) and the cap-and-trade tax (AB 398) to the existing gas tax of 30 cents per gallon, Californians could be paying more than $1.10 in taxes per gallon of gas by 2021. According to a USA TODAY article published in May 2017, Californians are already paying more in gas taxes than residents in most states, which hurts hard working families.