Promising the World to Sell the Policy

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A couple things should be observed about the claims of RI Department of Environmental Management Deputy Director Terrence Gray on State of the State, recently.

Mr. Gray was on the show to talk about the Transportation & Climate Initiative (TCI).  That’s a proposed regional organization that our state government wants to permit to tax gasoline to create a slush fund for projects that can fit under the “green” umbrella.

The definition of the “tax” is the first observation that must be made.  At one point, Mr. Gray insists that TCI is not a new gas tax, but then he proceeds to describe the mechanism by which the tax is implemented.  It reminds me of an old Remi song about cap-and-trade schemes:

It sounds like cap and trade is a tax we pay then
No sir, cap and trade is just a regulation

See tax is when there’s money spent
this is just a fee to the government

With TCI, the new regional government artificially limits gasoline production and distribution, forcing companies to bid for “allowances.”  The profit from these bids goes to government.  It’s a tax.

Which brings us to the spending part of the equation.  The other important observation one can make from Mr. Gray’s commentary is that he tried to sell the new tax on a wide variety of great things that could be done with the money, when obviously, it can’t go to everything.  So, when convenient, he’ll talk about spending it on public transportation… or charging stations for private cars… or some sort of dividend or fund to offset the new costs for residents.  Until there’s a written plan, it’s possible to say that the money will do any number of wonderful things.

If we look to the spending of the similar Regional Greenhouse Gas Initiative (RGGI), which covers energy production with a regional cap-and-trade scheme, we can get some sense of what actually happens.  Maybe early on the money is used to offset something in the costs to average Rhode Islanders, but inevitably, the funds drift toward government, whether solar for municipalities, buses for RIPTA, or similar programs.

Those may or may not be worthwhile projects, but one suspects it would be a harder sell if it were made clear that TCI is, yes, just another tax to fund government activities, which ought to be funded already if they’re good ideas, given the amount we already pay for government.