An Inconvenient Tax
by Stephen Filler, Tarrytown, New York on 01.23.07
It's basic economics that the price of goods and services should reflect (or “internalize”) all the societal costs of those goods and services. Yet the price of many products -- including electricity, gasoline and other fossil fuels -- frequently does not include all costs, particularly those related to global warming. This is not suprising given that most of us had no idea that there was any external “cost” to greenhouse gas emissions until the late 80's.
One proposal often floated to “internalize” the costs of greenhouse gases is a carbon tax, but because of American’s great aversion to taxes, the proposal is usually discarded even before it is considered. Now comes the Carbon Tax Center -- a much needed forum for discussion about carbon taxes.
In addition to providing reports and information about a carbon tax, the Center will “provide intellectual and practical support, as well as a sense of community, to help carbon tax proponents . . . across the political spectrum coalesce into an irresistible civic force."
The Center includes a blog, a monthly newsletter (titled "An Inconvenient Tax"), and compares a carbon tax with cap-and-trade solutions. They also provide an excellent slideshow concerning the carbon tax:
The Center is founded by Dan Rosenblum and Charles Komanoff, who bring a combined six decades of experience in economics, law, public policy and social change.
Photo credit: Greenpeace.
No-one on the planet wants to be saddled with more tax.
What is needed is a share in pollution - that is, each individual should all be given our fair share of pollution (= the amount the planet can bear divided by the number of adults) and keep within that limit.
No taxes necessary.
The trouble is, such a system is too fair, a concept alien to most westerners.
There's been a high, and increasing, tax on petrol (sorry, 'gas') in the UK for donkeys' years. And we all still drive around. If we all gave up doing this tomorrow the treasury would implode! And the treasury knows this, so no incentive to help us give up our cars.
To sum up: tax provides us with an incentive to give up (driving, smoking, drinking booze, whatever) and exactly the same incentive to the government to prevent us giving up!
Which is why, like Daithi, I'd go for Quotas, tradeable or otherwise. Imploding treasuries will just have to spend a bit less.
Tax-shifting could also have fair results. Increase taxes on "bads", but decrease them on "goods". From the point of view of the government, it's win-win. Same revenue, but incentives in the right direction for a change.
"There's been a high, and increasing, tax on petrol (sorry, 'gas') in the UK for donkeys' years. And we all still drive around."
Yeah, but look at the size and fuel economy of your cars compared to the cars in the US.
As Candy points out, tax-shifting is the way to go. In fact, as Lester Brown points out in "Plan B 2.0", the Europeans have been doing this with great success for years. The Germans shifted taxes from labor to energy and in four years lowered fuel use by 5 percent, while creating 45,000 jobs in the renewable energy sector. The Swedes have done similar and are now in the middle of a 10-year tax-shifting plan.
Any talk of taxes without tax-shifting is doomed. Tax-shifting is the perfect way to go, freeing up personal income, and only penalizing those who are the most egregious energy consumers.
The thing with social/external costs is that you are paying for it already. For example, we all pay higher health assurance fees due to the extra asthma cases caused by fine dust of cars. In a fair society owners of cars would pay money to a fund that covers the medical care of asthma sufferers. The "dust tax" would be dependent on the dustoutput of their cars. This would free also money in the society, because everybody gets a reduction in their health insurance.
This is ofcourse a simplified example, but it illustrates the principle.
An existing infrastructure is in place for collecting this tax. All we need to do is add it to the gasoline and utilities taxes. Place the burden as well on manufacturers and they can pass it along with the energy intensive prodcuts they sell. We already have a gas guzzler tax. That can be augmented.
Giving a credit by each individuals' head requires creating a whole new bureaucracy. It would be like printing a second type of money. A non-starter.
The anti-tax extremists will scream, but really, they're never satisfied. This makes it as painless as possible.
I acknowledge that a pollution quota is a little-favoured idea. Most people are afraid of change and big ideas which don't slot into their narrow and hazy vision of an unchanging personal future.
To be fair to myself, I did imply that the idea of quotas/fair shares was a non-starter. This is despite fair shares of pollution being a simple concept, which not many people really understand and, perversely for such a simple system, would have intensely profound and far-reaching effects
Very, very few people have given any thought fair shares of carbon. I think it would be known as a 'paradigm change' for it to come about.
That does not disqualify it being an intensely superior system to that of tinkering with tax.
Pieter: quotas, as you say, is a little like creating a kind of money, in a way. But that's sets you off on the wrong foot. What I want is an upper limit on pollution/climate change and for us to stay under that. That is, you will agree, quite obviously not acheivable under the current model.
Think about three more things: (1) carbon/pollution/call-it-what-you-will is not currently accounted for (which ties in with what you say); (2) setting up a quota system would be less complicated than an existing credit/debit card system and certainly less complex and less intrusive than an ID card and (3) individuals can choose not to participate in such a system, merely purchasing their carbon/pollution/energy as and when they need it.
Not wishing to belittle the following: "The Germans shifted taxes from labor to energy and in four years lowered fuel use by 5 percent, while creating 45,000 jobs in the renewable energy sector" but this really is what I call 'tinkering'. It's a bit like me cycling to and from work - I leave room for another car - but on a larger scale.
And all this leaves aside the arguments about the inherently regressive nature of taxes - that's a different ball game.
No - my answer is, cap pollution and work within that. Don't get peoples' backs up with increased taxation.
Sorry, that should say 'Rob', not 'Pieter'. Apologies.