Democrats seek to tackle climate change with import tax

Democrats are considering a tax on imports from countries that do not have strong policies to tackle climate change, seeking to include such a tax in a broad spending package that could pass without Republican votes.

A senior Democrat official said the $ 3.5 trillion budget deal that leading Senate Democrats reached on Tuesday would propose “polluter import charges,” but did not include further details.

Border carbon taxes are increasingly attracting interest from policymakers around the world, with the European Union (EU) coming up with a similar idea this week.

But Democratic lawmakers have yet to figure out how exactly they want to craft an import tax proposal, and they still have a long way to go before such a policy becomes a reality in the United States.

Democrats are looking to pass a big spending bill later this year without any Republican votes, and climate-related provisions are expected to be a key part of that.

The budget deal would include a number of climate-related provisions in a spending bill, including the import tax, a clean energy standard, and tax incentives for clean energy. The aim of the provisions is to respond President BidenJoe BidenGraham says he would ‘leave town’ to stop .5T spending plan Afghan Ambassador, diplomats withdrawn from Islamabad Biden seeks to prove his skeptics wrong MOREthe target of 80% clean electricity and 50% reduction in carbon emissions by 2030.

Democrats have said they are interested in an import tax in a bid to ensure other countries don’t undermine U.S. efforts to tackle climate change.

“At a time when we are focused on modernizing infrastructure to reduce carbon emissions, we want to make sure that foreign countries do not put our workers and manufacturers at risk,” said the chairman of the finance committee. of the Senate. Ron WydenRonald (Ron) Lee Wyden Democrats look to tackle climate change with import tax Balance / Sustainability – Softer side of shark week Biden must help end federal cannabis ban MORE (D-Ore.) Told reporters Thursday.

The Democrats’ budget deal comes the same week such a tax was included in a series of ambitious EU emissions reduction proposals. The border carbon tax proposed by the European Commission would apply to the import of products such as cement, electricity and carbon-intensive steel. The proposal foresees that the tax will come into force in 2026.

Columbia University professor and Nobel Laureate Joseph Stiglitz said that Europe and the United States simultaneously exploring the idea marked a major step towards imposing such a tax.

“With both Europe and the United States agreeing to do this, I think there is a good chance that this will happen,” he said. “And obviously there are technical issues, but I think as long as it’s done in a reasonable way these can be fixed.”

But Congressional Democrats have many questions as they consider drafting legislation on a border carbon tax.

Many tax and climate policy experts have questioned lawmakers pursuing an import tax without strong climate policies when the United States does not have a federal carbon price.

“I think it’s great that this is being discussed. I think it could be very effective, especially since the EU and the US are the biggest economies in the world, ”said Danny Richter, vice president of government affairs for Citizens Climate Lobby.

“However, I don’t think the United States can do that unless we also have a national carbon price. … I think it’s fantastic, but I think it’s the start of a productive discussion, ”he added.

Nat Keohane, president of the Center for Climate and Energy Solutions, said a border carbon measurement must be combined with national policies designed to meet Biden’s emission reduction targets.

“This must be accompanied by the other provisions that accompany the cuts we need,” he said.

Democrats did not propose a carbon pricing system in their budget deal. The White House has refused to approve or exclude a carbon pricing system. In June, Sen. Sheldon White HouseSheldon Whitehouse Democrats Seek To Fight Climate Change With Import Tax On Money: Democrats Reach Deal on .5T Target | Biden rallies Democrats: ‘We’ll get there’ Democrats call for inquiry into wealthy Americans’ tax avoidance strategies (DR.I.) said that “there could be a very big fight in the Senate on this issue when we get to where the Senate has a role to play.”

Other questions that lawmakers face include which products from which countries would be subject to the tax and what the rate would be.

“The main question is what will be the criteria for its taxation,” said Thornton Matheson, senior researcher at the Urban-Brookings Tax Policy Center.

Experts also said it was not clear whether the Democrats’ proposed import tax would be associated with an export rebate and how such a rebate might work.

Democrats could face criticism that their proposal violates Biden’s pledge not to raise taxes for families earning less than $ 400,000 a year, according to the tax design.

Wyden said he is committed to ensuring that an import tax on polluters does not violate Biden’s promise.

“I will make sure as chairman of the Senate finance committee that no carbon policy hits workers and working families,” he said.