Citizens’ Guide to Initiative 732: To Increase Carbon-based Energy Taxes and Reduce the State Sales Tax and Business Taxes to Reduce Carbon Emissions

With climate change ranking as the most divisive issue in national politics, it is not surprising that Initiative 732, which seeks to cut carbon emissions, is contentious. It is the most recent in a series of polices designed to address climate change.

The revenue-neutral carbon tax proposed by Initiative 732, has shifted some of the traditional political lines in Washington, with the left and right finding splits in support and in opposition.

The new tax would apply a tax to carbon-based energy, both electricity and motor fuel, and would cut other taxes to offset the new tax increase. Rather than increasing revenue or funding more government programs, the goal is to shift the incentives of companies and families away from carbon-based energy.

The initiative would raise taxes by about 15 cents per gallon of gas initially, up to 25 cents per gallon, then gradually increasing after that. To offset that increase, it would cut state sales taxes from 6.5 percent to six percent in 2017 and then to 5.5 percent in 2018.

The Washington State Office of Financial Management says the initiative would result in a $200 million average annual tax cut statewide. Families and businesses would see varying impacts based on the mix of energy costs and sales tax they currently pay. For example, farms with low fuel costs and high capital expenditure would expect to see their taxes reduced. Farms with larger fuel costs or low capital expenditure would likely see their tax bills increase.

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