Now that the blue-ribbon tax commission appointed by Gov. Arnold Schwarzenegger and legislative leaders has completed its series of expert briefings on various tax issues, the real work of determining what to recommend will begin.
Discussion among commissioners today indicated that internal sentiments were all over the map. Chairman Gerald Parsky clearly has work ahead if he hopes to form a consensus so that the commission can present policymakers in Sacramento with a united front.
Commissioner Fred Keeley, the former Santa Cruz assemblyman, told me afterward that if the panel is to reach a consensus, one recommendation will have to be the creation of a carbon tax that would be levied at the refinery level on gasoline, diesel and jet fuel. A tax based on the amount of tons of greenhouse gases the fuels will emit when burned would generate an estimated $5 billion a year. Keeley, who has championed the idea, said a majority of commissioners now supports it.
It could become the basis for tradeoffs for such items sought by the business community as a reduction in capital gains taxes and the elimination of sales taxes on manufacturing equipment.
The idea does have the advantage of being tailored to the commission's charge, which is to update the state tax system to meet the demands of the 21st century economy. That is, after all, why it's called the Commission on the 21st Century Economy.
Expect some resistance from the environmental community, however. It's not that they don't like the idea; it's that they'd prefer to see revenue from a carbon tax used to promote development of renewable energy and other green initiatives. If it's included in the commission's package, the recommendation would be revenue-neutral -- which means any revenue from it would simply be used to offset reductions in other taxes.