Carbon Cap-and-Tax would slam Oregon Ag

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By Taxpayer Association of Oregon Foundation

Agriculture is one of Oregon’s largest industries, accounting for about 10 percent of the state’s jobs, despite principal farmers and ranchers accounting for less than 1 percent of the population. Oregon leads the nation in production of a variety of products, including Christmas trees and hazelnuts and is the 2nd largest source of hops, which have fueled the “craft beer” boom in the US. Given all the benefits the industry brings to the State and its position as a major driver of tax revenue for State programs, the Legislature’s efforts to hurt the industry through it’s proposed “cap and tax” plan to combat global climate change is ill-timed according to people in the Ag community.

At its essence, the “cap and tax” plan would seek to increase the cost for any business that produces carbon dioxide by capping the total emissions allowed, and then charging a tax on emissions beyond that limit. It would develop an entirely new bureaucracy within State government that would have wide-ranging powers to limit economic activity. By definition, one aspect of this plan would be a dramatic increase in the cost of traditional fuels like gasoline and diesel due to government limits and/or tax increases. Because agriculture relies on such fuels to plant, nurture, harvest and transport crops, it would be hit hard by the “cap and tax” plan. The current pricing advantage Oregon agriculture enjoys in the marketplace – which allows the export of 80 percent of crops grown in the State – would evaporate since it would be absorbing new costs which cannot be passed along, and which producers in other States don’t have to pay.

The Legislature is at risk of making the classic mistake of using a program originally developed in and made to fit California and trying to paste it on to Oregon. The California program has damaged agricultural producers in that State, and has led to uncertainty and unfair outcomes, while also having no impact on global CO2 levels or reducing the pace of climate change at all. Oregon currently produces less than 1 percent of all US greenhouse gasses, so even eliminating the entire agricultural industry would also have no significant impact on worldwide CO2 levels. The impact on Ag would be great and need to be considered when balancing the options surrounding carbon regulations.