|
WASHINGTON,
D.C. - As tax day looms, a prominent environmentalist is urging changes he
says will spare the taxpayer, spur the economy, and save the planet.
''As Americans are filing their income taxes, many of their counterparts in
several European countries are benefiting from a steady decline in income
taxes as governments lower taxes on income and raise taxes on environmentally
destructive activities,'' said Lester Brown, president of the Earth Policy
Institute, a think tank here. ''It's time for
the entire world to lower income taxes and raise environmental taxes.''
The practice of reducing income taxes while increasing levies for air, water,
and soil pollution--has swept nations from Singapore to Sweden, said Brown, a
pioneer in the merging of economics and ecology. He called it ''environmental tax shifting''; in many countries it also is referred
to as environmental tax reform. Regardless
of the label, the practice ''usually brings a double dividend,'' he added. ''In reducing taxes on
income--in effect, taxes on labor--labor becomes less costly, creating
additional jobs while protecting the environment.''
That is what motivated Germany to shift taxes from income to energy, Brown
said, adding that ''reducing the air pollution from smokestacks and tailpipes
reduces the incidence of respiratory illnesses, such as asthma and emphysema,
and thus overall health care costs.''
The idea of using taxes to discourage environmental destruction is not new.
Singapore introduced a levy on cars entering the central business district
more than 2 decades ago. The bid to curb gasoline use, air pollution, and
traffic congestion succeeded and a number of cities eventually followed suit,
among them Oslo, Melbourne, and London.
The idea of a broader, environmental overhaul of national tax codes began to
catch on only a few years ago but is beginning to generate enthusiasm among
public policy makers despite resistance from some businesses.
Germany and Sweden lead Western Europe in environmental tax reform. By 2001, a 4-year plan adopted by
Germany in 1999 had
lowered fuel use by 5%, said Brown. It also accelerated growth in the
renewable energy sector, creating some 45,400 jobs by 2003 in the wind industry alone. Brown, citing industry
figures, said he expected the figure to rise to 103,000 new jobs by 2010.
In 2001, Sweden
launched a 10-year environmental tax shift designed to convert some $3.9 billion
of taxes from income to environmentally destructive activities. The average
household has seen its income tax bill reduced by around $1,100. That burden has not disappeared.
Rather, it has shifted to vehicle and fuel taxes--a central plank of Sweden's
plan to be free of oil use by 2025.
Other European countries embracing major tax changes of this sort include
France, Italy, Norway, Spain, and the United Kingdom. Japan and China, Asia's leading
economies, are weighing possible taxes on carbon emissions, mostly released
when oil, gasoline, and coal are burned and blamed by scientists for global
warming.
Business opposition so far has stymied Japanese lawmakers' efforts to launch
an environmental tax shift, Brown said. China, he added, is pressing ahead because policymakers
there are convinced that taxation is more effective than government
regulation in influencing consumers' buying habits in a market economy.
Some 2,500 economists, including 8 Nobel Prize winners, also have endorsed
the concept of environmental tax shifts.
Harvard economist N. Gregory Mankiw wrote in Fortune
magazine:
''Cutting income taxes while increasing gasoline taxes would lead to
more rapid economic growth, less traffic congestion, safer roads, and reduced
risk of global warming--all without jeopardizing long-term fiscal solvency.
This may be the closest thing to a free lunch that economics has to offer.''
From
Brown's vantage point, the purpose of all this tax shifting is to incorporate
the environmental costs of products and services into their market prices or,
in his words, ''to help the market
tell the environmental truth.''
The result would be a system offering carrots to the environmentally
responsible, whose income taxes fall and who can cut their environmental
taxes by reducing the amount of garbage and pollution they generate. The system also would brandish a hefty
stick at polluters in the form of higher fuel costs, however.
Brown cited analysis by the International
Center for Technology Assessment, a private research group that
has said that the real cost of gasoline--including such indirect items as oil
industry tax breaks, oil supply protection costs, oil industry subsidies, and
health care costs of treating auto exhaust-related respiratory
illnesses--amounts to about $9 per gallon.
Adding these
external costs to the average price of gasoline in the United States would
push the national average retail price today to around $11.70 per gallon--assuming consumers were expected to
foot the entire bill without any sacrifice of profit by industry. ''For
Americans, this is shockingly high,'' Brown acknowledged but added that
gasoline is much cheaper in the U.S. than overseas. British, French, German,
and Italian drivers regularly pay around $6 per gallon for gasoline, he said.
However horrifying the prospect of higher pump prices might be to many
Americans, environmentalists--including industry veterans--shudder at the
possible consequences of not embracing ''green
accounting.''
For Brown, the threat is aptly summarized in a quote from Oystein Dahle, a
former vice president of Exxon for Norway and the North Sea.
''Socialism collapsed because it did not allow the market to tell the
economic truth,'' Dahle said. ''Capitalism may collapse because it does not
allow the market to tell the ecological truth.''
|
