Report: Carbon tax could spur economy

Increased levy carries for higher consumer use costs while lowering other taxes

Massachusetts could create more than 10,000 new jobs, generate billions more in Gross Domestic Product and lower emissions to 80 percent of the quantity consumed in 1990 by imposing a carbon tax and dedicating the added revenues to investment or lowering other taxes, according to a new report.

Scott Nystron, a senior economic associate from Regional Economic Models, Inc. (REMI), told a packed crowd of lawmakers and press at the State House this morning that a carbon tax would also raise energy costs by 10 to 15 percent for heating fuels and 4 to 8 percent for motor fuels.

These findings were included in a report that came out last week after the Committee for a Green Economy, a ballot initiative group, asked Nystron’s Amherst-based policy analysis agency to assess the economic impact of carbon-tax legislation.

The report found that using half the carbon-tax revenue to substitute lost funds on a lowered corporate tax rate and half to subsidize lowered income and sales taxes would spur spending among households and firms. A higher price at the pump would discourage importing fuel from other states. These effects would translate to an increase in the GDP from $1 billion ot as much as $10 billion.

“It tends to be discouraging economic activity that is from areas related to imports… but the revenue that is gained from that activity goes to tax cuts for people within the state,” said Frederick Treyz, president and CEO of REMI.

REMI also reports that a carbon tax would rebalance the economy in support of labor-, rather than energy-, dependent sectors, creating up to 12,000 more jobs.

Overall costs of living could rise by almost .3 percent if a $45 per metric ton carbon-tax – the highest of three levels that was analyzed — was imposed, with electricity costs rising more 4 percent and drivers paying around 30 cents more per gallon.

“[The change in prices] unfortunately is not negative or even but it only increases the [Consumer Price Index) very slightly,” said Nystrom.

The model shows fuel consumption dropping from 90 percent of the 1990 benchmark, which reflects the state’s rate of consumption in 1990, to 85 percent, in 2035.

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State Rep. Thomas Conroy, opened the event, explaining that the carbon-tax bill he cosponsored with Sen. Michael Barrett, currently being discussed in the Joint Committee on Revenue, tackles one of today’s largest threats.

“It is our effort to address an increasingly crisis level challenge that we face as citizens of the globe… and that is human-induced climate change,” Conroy said.