NYC mayor urges carbon tax to cut individual taxes

By Joan Gralla

NEW YORK (Reuters) - New York city Mayor Michael Bloomberg called for a national greenhouse gas tax on Friday, saying it would slow global warming and fund a $500 a year tax cut for the average taxpayer.

Under his plan, polluters like energy companies and utilities would have to pay $15 per tone of greenhouse gas they emit. The money would pay for a cut in federal payroll taxes, giving the average taxpayer the $500 a year break.

The energy industry likely would pass on the cost of the new tax to the consumer, the mayor admitted on his weekly ABC radio show. "So yes, it gets passed on, but the people who suffer the most get the benefit in the other direction, and the whole world benefits because we pollute less," he explained.

Companies that develop innovative technology to slash greenhouse gases would get some of the anti-pollution tax revenues in the form of tax credits from a new fund, Bloomberg said, according to a copy of the speech will give at a U.S. mayors conference in Seattle.

Saying his plan would encourage consumers and companies alike to buy more fuel-efficient items -- from light bulbs to appliances, he added: "Even though energy costs would rise, the savings from tax cuts and energy efficiencies would, over the long run, leave consumers with more money in their pockets."

The more companies cut their pollution, the lower their tax bill, Bloomberg said, adding the "certainty" of the tax credits will also inspire them to develop more groundbreaking technology than a "cap-and-trade" approach.

CARBON TAX OR CAP-AND-TRADE?

U.S. politicians now are mulling ways to curb emissions of carbon dioxide and other greenhouse gases from industry smokestacks and car tailpipes that most scientists blame for global warming.

Cap-and-trade programs, favored by most climate bills in the U.S. Congress, would limit how much pollution companies, such as utilities, could spew into the atmosphere.

This would leave the companies free to either cut their own pollution if they risk exceeding the limits, which drop over time -- or buy credits from greener companies or countries. The credits can also be freely traded by speculators.

The U.S. Senate's subcommittee on environment and public works on Thursday approved the leading cap-and-trade bill. California Democrat Sen. Barbara Boxer, who chairs the environment subcommittee, hailed the bill as a way to prevent "the ravages of unfettered global warming."

But Bloomberg, a former Republican whose switch to the independent party earlier this year sparked speculation of a presidential bid, slammed the cap-and-trade approach.

"The primary flaw of cap-and-trade is economic -- price uncertainty; while the primary flaw of a pollution fee is political -- the difficulty of getting it through Congress."

Citing his 15 years of work on Wall Street and 20 years at the helm of his own company, the eponymous news agency that made him a billionaire, Bloomberg said: "the certainty of a pollution fee -- coupled with a tax cut for all Americans -- is a much better deal."

The cap-and-trade approach could cost more because "middle-men" will be making money off the trades, he added.

"For the money, a direct fee will generate more long-term savings for consumers, and greater carbon reductions for the environment," he added.