Air Date: Week of February 5, 1993

Steve talks with former US Senator Paul Tsongas about proposals in Washington for new broad-based energy taxes. Phased-in hikes in the gasoline tax were part of Tsongas' economic and environmental platform during his unsuccessful run for the White House last year.

Transcript

CURWOOD: Electric cars are one way to help clean up city air. Another is to get drivers out of their cars, or into more efficient ones, by raising the price of fuel through higher taxes.

The idea of raising taxes on gasoline and other sources of energy is currently being floated by the Clinton Administration, as a way to fight not only pollution but the Federal deficit as well. It has yet to become a popular notion, and many economists feel that tax increases slow the economy. But some say that over the long run, energy taxes might actually help stimulate the economy, by spurring innovation and boosting productivity. Energy tax supporters say it would make the US less dependent on foreign oil and on the whims of foreign governments.

Former Democratic Senator Paul Tsongas of Massachusetts proposed higher energy taxes during his unsuccessful Presidential campaign last year. Specifically, he called for a hefty hike in the gasoline tax. Senator Tsongas joins us now from his home in Lowell, Massachusetts, to discuss the current debate on energy taxes. Hi, Senator, thanks for joining us.

TSONGAS: Thank you.

CURWOOD: Let me ask you first -- how're you feeling these days?

TSONGAS: Well, I'm feeling, other than feeling tired as a result of the radiation treatments, I'm doing fine.

CURWOOD: Good, I appreciate you taking the time to talk to us about this. I'm wondering, Senator Tsongas, why the US has virtually no energy taxes now -- coal isn't taxed, nuclear energy isn't taxed, gasoline is taxed a pretty small amount. Why do you suppose that is?

TSONGAS: Well, I think in the United States there are traditions, and the fact is that we are a much more wide-open country, the love affair with the automobile is much more an American phenomenon, than it is in other countries. And on issues, for example, like nuclear energy and the use of natural gas and coal, it's simply not been an area of taxation. People have looked elsewhere. But I think part of that has now created a vacuum where people recognize this is an area where taxation makes a lot of sense. There are examples in other countries of nations moving in this direction, and we have to simply cut back on our consumption. So what you have is energy policy, environmental policy, foreign policy, and a need for revenues coming together and looking at this one bright star that heretofore has for the most part been untouched.

CURWOOD: There are four basic options that seem to be out there right now for energy tax plans. One would call simply for a hike in gasoline taxes; another would call for a hike in the cost of oil overall through an import fee; another would tax the amount of carbon that's in these forms of energy, and that would fall most heavily on coal, which has a lot of carbon, and not nearly so heavily on natural gas which has quite a bit less, and not at all on nuclear power; and then there's the notion of a tax on BTU, that is the British thermal unit or the energy content of the source of energy, whether it's nuclear power or gasoline or coal or presumably even solar energy. Could you rank these options for us, both economically and for their effect on the environment?

TSONGAS: Well, I would put the gasoline tax at the top. I think the arguments for it have been made by energy conservationists and environmentalists and economists for years, and need not be repeated. I would think a BTU content, I would put second; probably an import fee and a carbon fee, probably tied for third. The carbon tax would have its greatest impact on coal, and I think since that is, that is an area where you have great regional disparity. In the Northeast, for example, you have virtually no dependence upon oil -- upon coal rather -- for your generation of electricity. In other parts of the country, it's simply the source of electricity generation. And the oil import fee is the reverse -- you have the greatest impact in those parts of the country like the Northeast which is the most dependent upon foreign oil. So no matter which of these you look at, there's gonna be somebody who'll pay a higher price than somebody else. To the extent you have an energy policy that mixes everything together, you're far more likely to have a policy that has at least some token impact everywhere and a lesser argument about inequity.

CURWOOD: Now some advocates of environmental change say that each of us have to make our own decisions to change things, to improve the environment. Now, accepting that perspective for a moment, which of the tax proposals do you think would best increase people's awareness to make changes to help the environment, do you think?

TSONGAS: Well, if you were to have a tax, for example, on imported oil, then what you would do is you'd have a percentage of the American people, far less than one hundred, that was aware that the cost of their heating oil went up. That doesn't give you across-the-board behavioral change. The value of a gasoline tax is that most people either ride in cars or own cars or whatever. The advantage of a gasoline tax, the way I would propose it, is that not only do you raise it this year but you raise it every year for ten years. So what you're saying to people is we're giving you time to plan, that you can modify your decisions on what kind of a car you buy, what kind of commuting decisions you make, that kind of thing. So it's not only the tax, but it is the inevitably of that tax being raised over time that gives people a chance to make their personal decisions.

CURWOOD: Just for a moment, Senator Tsongas, I'd like you to look into your crystal ball. What do you think we'll have -- if we'll have -- an energy tax this time next year?

TSONGAS: I think what you're going to have is a bloodbath. I think Bill Clinton is going to be drawn inevitably, when you look at people like Leon Panetta and Lloyd Bentsen and Alice Rivlin, he will be drawn by those people to make a very tough, courageous decision, because he basically has no choice. And then he's going to take that proposal to a very skittish Congress. And I think what you're going to have is a real battle over what is good policy for the country versus what people perceive as somehow a threat to their own re-election. And I can see this issue becoming cast in moral terms, in which the young generation, for example, begins to get involved and begins to see their futures at risk and that's where we begin to make the tough decisions. So I think this is going to be nasty, but I think in the last analysis it will pass.

CURWOOD: Thank you very much. Former Democratic Senator from Massachusetts, Paul Tsongas, thank you so much for joining us.

TSONGAS: Thank you.