Bill Text: HI HB460 | 2022 | Regular Session | Introduced

---

Bill Title: Relating To A Carbon Tax.

Spectrum: Partisan Bill (Democrat 9-0)

Status: (Introduced - Dead) 2021-12-10 - Carried over to 2022 Regular Session. [HB460 Detail]

Download: Hawaii-2022-HB460-Introduced.html

---

HOUSE OF REPRESENTATIVES	H.B. NO.	460
THIRTY-FIRST LEGISLATURE, 2021
STATE OF HAWAII

A BILL FOR AN ACT

 

 

relating to a carbon tax.

 

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 

     SECTION 1.  The legislature finds that climate change is a very critical issue confronting the State.  The overwhelming consensus of climate scientists who have studied the issue is that climate change is occurring primarily as a result of the combustion of fossil fuels.  The legislature concurs with this conclusion.

     The Hawaii climate change mitigation and adaptation commission has stated that the most effective single means of reducing greenhouse gas emission is to "put a price on carbon".  The concept of "carbon pricing" is supported by various local and state entities and, as of the end of 2018, fifty-one carbon pricing initiatives have been implemented or scheduled for implementation worldwide.  Numerous respected economists have emphasized the importance of including the social costs of the adverse impacts of carbon dioxide emissions in future market pricing involving fuels.

     The legislature further finds that the best means of carbon pricing for the State is a use-based tax on all carbon dioxide‑emitting fuels, such as oil, gas, and coal.  The department of taxation already implements various fuel-based taxes, including the environmental response, energy, and food security tax, which imposes a tax on distributors of barrels of petroleum products and of each million British thermal units (BTUs) of heat value of fossil fuels other than petroleum.  The legislature concludes that the environmental response, energy, and food security tax provisions could be amended to implement a state carbon emissions tax.  However, the current tax rates per barrel and per million BTUs of fossil fuels should be replaced with a tax table that reflects the quantity of carbon dioxide emissions produced per barrel or per million BTUs of various fuels.

     The legislature additionally finds that the virus known as "SARS-CoV-2" causes a disease named "coronavirus disease 2019" (COVID-19), which spread globally and was declared a pandemic by the World Health Organization on March 11, 2020.  Upon reaching Hawaii's shores, the COVID-19 outbreak disrupted the local economy, leaving hundreds of thousands of residents unemployed, and leaving the State with an approximately $2,300,000,000 budget deficit.  A July 2016 report by the Brookings Institution estimated that the State of Hawaii could generate more than $360,000,000 annually in carbon tax revenues.  To arrive at this figure, the study used 2013 state-level data on per capita energy-related carbon dioxide emissions and combustion data for electric power and industrial, while assuming the imposition of a tax rate of $20 per metric ton of carbon dioxide.  Yet, many climate change experts have concluded that, to be effective in achieving reductions in combustion of fossil fuels to the extent needed to meet the goals set under the Paris Agreement, the price of carbon emissions should be set in the range of $40 per metric ton of carbon dioxide emissions in 2020 and increase to a price of $80 by 2030.

     The legislature also finds that the need to establish effective carbon prices to meet the State's goals of addressing climate change and generating new sources of revenue aligned with the advancement of a sustainable economy is compelling.

     Accordingly, the purpose of this Act is to:

     (1)  Amend the environmental response, energy, and food security tax to address carbon emissions;

     (2)  Increase the tax rate to effectively set a price of $40 per metric ton of carbon dioxide emissions in 2022; and

     (3)  Incrementally increase the tax rate over time to reach an equivalent to a carbon price of $80 per metric ton of carbon emissions in 2030.

     The legislature notes that, since the initial increase in tax rates is not scheduled to take effect until 2022, the legislature will have the opportunity to consider any revisions to the tax rates set by this Act that may be warranted by the results of the carbon pricing study currently underway pursuant to section 13 of Act 122, Session Laws of Hawaii 2019.  In amending the environmental response, energy, and food security tax, the legislature has taken into account the license taxes currently imposed on gasoline and diesel fuel.  The legislature believes that the combined impact of the amendments made by this Act and the existing license taxes will achieve the carbon price targets.

     SECTION 2.  Section 243-3.5, Hawaii Revised Statutes, is amended to read as follows:

     "§243-3.5  Environmental response, energy, carbon emissions, and food security tax; uses.  (a)  In addition to any other taxes provided by law, subject to the exemptions set forth in section 243-7, there is hereby imposed a state environmental response, energy, carbon emissions, and food security tax on each barrel or fractional part of a barrel of petroleum product sold by a distributor to any retail dealer or end user of petroleum product, other than a refiner.  The tax [shall be $1.05] on each barrel or fractional part of a barrel of petroleum product [that is not aviation fuel; provided that of the tax] shall be in the amounts provided in the following table:

          Product           2022    2024     2027     2030

          Propane: Butane  $10.47  $13.96   $17.45   $20.94

          Gasoline          $8.22  $13.20   $18.18   $23.16

          Diesel          $10.35  $15.08   $21.01   $26.34

          Kerosene         $16.38  $21.84   $27.30   $32.76

          Aviation gas     $14.03  $18.71   $23.39   $28.07

          Jet fuel         $16.07  $21.43   $26.79   $32.15

          No. 6 Fuel oil   $19.81  $26.41   $33.01   $39.62

          Other           $16.00  $21.33   $26.66   $32.00

The tax for each year referenced above shall take effect on July 1 of that year and continue to be applicable through June 30 of the next year that is listed in the table.  The tax imposed by this subsection shall be paid by the distributor of the petroleum product.

     (b)  Tax revenues collected pursuant to [this] subsection[:] (a) shall be distributed in the following priority each fiscal year, with the excess revenues to be deposited into the general fund:

     (1)  [5 cents of the tax on each barrel] $1,291,000 shall be deposited into the environmental response revolving fund established under section 128D-2;

     (2)  [5 cents of the tax on each barrel] $3,872,000 shall be deposited into the energy security special fund established under section 201-12.8;

     (3)  [10 cents of the tax on each barrel] $2,582,000 shall be deposited into the energy systems development special fund established under section 304A-2169.1; [and]

     (4)  [15 cents of the tax on each barrel] $3,872,000 shall be deposited into the agricultural development and food security special fund established under section 141-10[.];

     (5)  All taxes paid on gasoline or other aviation fuel sold for use in or used for airplanes shall be deposited into the airport revenue fund established under section 248‑8;

     (6)  All taxes paid on gasoline, diesel, or other fuel sold for use in or used for small boats shall be deposited into the boating special fund established under section 248‑8; and

     (7)  Twenty-five per cent of the remaining tax collected pursuant to subsection (a) shall be refunded in an equal amount to every taxpayer with an adjusted gross income of less than $75,000 who files an individual income tax return with the department of taxation.

     [The tax imposed by this subsection shall be paid by the distributor of the petroleum product.]

     [(b)] (c)  In addition to subsection (a), the environmental response, energy, carbon emissions, and food security tax shall also be imposed on each one million British thermal units of fossil fuel sold by a distributor to any retail dealer or end user, other than a refiner, of fossil fuel.  The tax [shall be 19 cents] on each one million British thermal units of fossil fuel[; provided that of the tax] shall be in the amounts provided in the following table:

          Fuel              2022    2024     2027     2030

          Coal (all forms)  $3.92   $5.22    $6.53    $7.84

          Natural gas

          (including

          liquefied

          natural gas)      $2.12   $2.82    $3.53    $4.24

The tax for each year referenced above shall take effect on July 1 of that year and continue to be applicable through June 30 of the next year that is listed in the table.  The tax imposed by this subsection shall be paid by the distributor of the fossil fuel.

     (d)  Tax revenues collected pursuant to [this] subsection[:] (c) shall be distributed in the following priority each fiscal year, with the excess revenues to be deposited into the general fund:

     (1)  4.8 per cent of the tax on each one million British thermal units shall be deposited into the environmental response revolving fund established under section 128D-2;

     (2)  14.3 per cent of the tax on each one million British thermal units shall be deposited into the energy security special fund established under section 201-12.8;

     (3)  9.5 per cent of the tax on each one million British thermal units shall be deposited into the energy systems development special fund established under section 304A-2169.1; [and]

     (4)  14.3 per cent of the tax on each one million British thermal units shall be deposited into the agricultural development and food security special fund established under section 141-10[.]; and

     (5)  Twenty-five per cent of the tax on each one million British thermal units shall be refunded in an equal amount to every taxpayer with an adjusted gross income of less than $75,000 who files an individual income tax return with the department of taxation.

     [The tax imposed by this subsection shall be paid by the distributor of the fossil fuel.]

     [(c)] (e)  The tax imposed under subsection [(b)] (c) shall not apply to coal used to fulfill [a signed] an existing power purchase agreement between an independent power producer and an electric utility that is in effect as of June 30, 2015[.]; provided that this exemption from taxation shall not apply to any extension of an existing power purchase agreement or to any subsequent power purchase agreement.  An independent power producer shall be permitted to pass the tax imposed under subsection [(b)] (c) on to an electric utility.  In [which] any  case[,] in which the tax is passed on, the electric utility may recover the cost of the tax through an appropriate surcharge to the end user that is approved by the public utilities commission.

     [(d)] (f)  A gas utility shall be allowed to recover the cost of the tax imposed under subsection [(b)] (c) as part of its fuel cost in its fuel adjustment charge without further approval by the public utilities commission.

     [(e)] (g)  Each distributor subject to the tax imposed by subsection (a) or [(b),] (c), on or before the last day of each calendar month, shall file with the director, on forms prescribed, prepared, and furnished by the director, a return statement of the tax under this section for which the distributor is liable for the preceding month.  The form and payment of the tax shall be transmitted to the department of taxation in the appropriate district.

     [(f)] (h)  Notwithstanding section 248-8 to the contrary, the environmental response, energy, carbon emissions, and food security tax collected under this section shall be paid over to the director of finance for deposit as provided in subsection [(a) or (b),] (b) or (d), as the case may be.

     [(g)] (i)  Every distributor shall keep in the State and preserve for five years a record in a form as the department of taxation shall prescribe showing the total number of barrels, and the fractional part of barrels, of petroleum product or the total number of one million British thermal units of fossil fuel, as the case may be, sold by the distributor during any calendar month.  The record shall show any other data and figures relevant to the enforcement and administration of this chapter as the department may require.

     [(h)] (j)  For the purposes of this section:

     "Barrel" may be converted to million British thermal units, using the United States Department of Energy, Energy Information Administration annual energy review or annual energy outlook.

     "Fossil fuel" means a [hydrocarbon deposit,] fuel, such as coal, natural gas, or liquefied natural gas, derived from a hydrocarbon deposit resulting from the accumulated remains of ancient plants or animals [and used for fuel]; provided that the term specifically does not include petroleum product."

     SECTION 3.  Sections 128D‑2(a), 141‑10(b), 201‑12.8(a), and 304A‑2169.1(b), Hawaii Revised Statutes, are amended by substituting the phrase "environmental response, energy, carbon emissions, and food security tax" wherever the phrase "environmental response, energy, and food security tax" appears, as the context requires.

     SECTION 4.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 5.  This Act shall take effect on January 1, 2022.

 

INTRODUCED BY:	_____________________________

 

 

Report Title:

Environmental Response, Energy, and Food Security Tax; Carbon Emissions; Carbon Tax

 

Description:

Amends the environmental response, energy, and food security tax (barrel tax) to tax various fossil fuels at a rate equivalent to $40 per metric ton of carbon dioxide emissions in 2022.  Incrementally increases the barrel tax rate to be equivalent to a carbon price of $80 per metric ton of carbon emissions in 2030.  Amends the distribution of barrel tax revenues.  Renames the barrel tax as the environmental response, energy, carbon emissions, and food security tax.  Effective 1/1/2022.

 

 

 

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.