Saturday, July 12, 2008

Taxes and the Environment

Environmentally-minded politicians like Stephane Dion and Elizabeth May seem to assume that environmental taxes should be revenue neutral. In particular, the plan always seems to be to reduce income tax by the same amount as the consumption tax. This is wrongheaded, because:

1. Income taxes are progressive. Consumption taxes are not. We need some consumption taxes, but we should not shift away from income tax.
2. Environmentally-based consumption taxes, such as gas tax, should be used to move our society to a less oil-dependent state. The revenue should be used to subsidize public transit, to promote alternative energy sources, and to help people transition to less polluting lifestyles.

The parking lot at any mall is full of SUVs, vans and pickup trucks. Big buses chug along with a handful of passengers, if that. Ontario homeowners flagrantly waste energy, meaning that we're blanketed by pollution from the Nanticoke coal-burning generators - which our current provincial government wants desperately to shut down, but can't at current consumption levels.

Nothing is going to change without sustained higher prices for oil. When the price increase is caused by taxes, we have revenue to help people deal with the transition.

If the environment turns into a full-blown crisis, then we need to address it with a holistic vision of our society, not blinkered policies that see only the environment. We need to move into a new way of operating that preserves certain principles, such as modest income redistribution. This isn't like a war, when there are privations for a short period. This is about finding a permanent way to operate our society in a more environmental way.



Anonymous said...

You seem to live in a vacuum. If you look at the rest of the world you will see that countries like china for instance subsidize the cost of gas to their consumers. When you add the enormous cost advantage of their cheap labor and energy costs that are 1/2 what we pay their cost advantages are clearly evident. Now you want to further cripple Canadian industry with more taxes when they are already struggling. It looks like we will meet our Kyoto targets through poverty.

Yappa said...

To anonymous at 4:42 -

The Chinese government caps consumer gas prices at about half what Americans pay. The per capita income in China is about $2,000 per year, which is many times less than American per capita income. In any event, consumer gas prices in China have very little to do with our competitiveness.

Europeans pay a whole lot more for gas than North Americans and they manage very well. It didn't send them into poverty. They adapted. We need to adapt. We'll be much better off adapting if we fund transition policies through gas taxes than if we stick our head in the sand.

Anonymous said...

I think you can start by cutting off your utilities, in winter, and burn your driver's licence. When you do that, as an example, then you might have some credibality.

The Green Shift Tax [New GST] is just a money grab, there is more evidance that "global warming" is loosing power. The Northern ice cap has not melted yet.

[ .... note the date please.]

We are cooling off the world without the Grees Shi*t Tax - if anything we should increase GHG to warm up the planet.

Yet you do not want facts getting your way, just as long as the money comes in.