Ecological Tax Reform Theory and Reality

Education Labeling Liability Regimes Regulation Voluntary Agreements Permit Trading Taxation

environmental taxation

Tax base x Tax rateTax revenue =

Tax base x Tax rateTax revenue = ↓ a case study in theory

Tax base x Tax rateTax revenue = ↓ a case study in tax policy

Tax base x Tax rateTax revenue = ↓ a case study in politics

Theories Pigouvian theory

Pigouvian Theory tax base x tax rate = tax revenue ↓ external cost

Theories Pigouvian theory Polluter pays principle

Polluter Pays Principle tax base x tax rate = tax revenue ↓ for what?

Polluter Pays Principle tax base x tax rate = tax revenue ↓ external costs restoration costs cost required to abate pollution

Theories Pigouvian theory Polluter pays principle Least cost abatement

Least Cost Abatement tax base x tax rate = tax revenue ↓ cost required to abate pollution

Theories Pigouvian theory Polluter pays principle Least cost abatement Double dividend

Double Dividend tax base x tax rate = tax revenue ↓ tax rate under another theory that provides sufficient revenue for tax reduction

The Choice tax base x tax rate = tax revenue ↓ external costs restoration costs cost required to abate pollution cost required for tax reduction

Tax base x Tax rateTax revenue = ↓ a case study in tax policy

Tax policies affecting the tax base Environmental effectiveness Administrative feasibility Economic effect

Tax policies affecting the tax base Environmental effectiveness Administrative feasibility Economic effect

Tax policies affecting the tax base Environmental effectiveness Administrative feasibility Economic effect Equity

Tax policies affecting the tax base Environmental effectiveness Administrative feasibility Economic effect Equity Still environmentally effective?

Tax base x Tax rateTax revenue = ↓ a case study in politics

tax base x tax rate = tax revenue ↓ - $$$ + $$$

Proposed energy incentives Wind and biomass -- $1 billion Solar -- $71 million Alternative fuel vehicles -- $2.4 billion Politically easy; fiscally difficult

Environmental tax increase Dedicated revenues = How to spend the money? Deficit reduction Other tax relief

Where is the political will?

Effective fabric or the emperor’s new clothes?

The evidence to date

Tolerance Principles Iterative approach Best available alternative Cost allocation ethic Educational function

Effective fabric or the emperor’s new clothes?

Ecological Tax Reform Theory and Reality

Education Labeling Liability Regimes Regulation Voluntary Agreements Permit Trading Taxation

U.S. Taxes in 2000 $2 trillion federal tax revenues $540 billion state tax revenues $332 billion local tax revenues Total -- $2.9 trillion

Taxation -- and Environment TaxationEnvironment Environmental Taxes