Showing posts with label ecological. Show all posts
Showing posts with label ecological. Show all posts

Friday, 29 May 2015

Ecotax


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Taxation
An aspect of fiscal policy
Ecotax (short for Ecological taxation) refers to taxes intended to promote environmentally friendly activities via economic incentives. Such a policy can complement or avert the need for regulatory (command and control) approaches. Often, an ecotax policy proposal may attempt to maintain overall tax revenue by proportionately reducing other taxes (e.g. taxes on human labor and renewable resources); such proposals are known as a green tax shift towards ecological taxation. Ecotaxes address the failure of free markets to consider environmental impacts.[1]
Ecotaxes are examples of Pigouvian taxes, which are taxes that attempt to make the private parties involved feel the social burden of their actions. An example might be philosopher Thomas Pogge's proposed Global Resources Dividend.[2][3]


Taxes affected[edit]

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Examples of taxes which could be lowered or eliminated by a green tax shift are:
Examples of ecotaxes which could be implemented or increased are:

Economic frameworks and strategies employing tax shifting and ecotaxes[edit]

The object of a green tax shift is often to implement a "full cost accounting" or "true cost accounting", using fiscal policy to internalize market distorting externalities, which leads to sustainable wealth creation. The broader measures required for this are also sometimes called ecological fiscal reform, especially in Canada,[4] where the government has generally employed this terminology. In some countries the name is eco-social market economy.
Tax shifting usually includes balancing taxation levels to be revenue-neutral for government and to maintain overall progressiveness. It also usually includes measures to protect the most vulnerable, such as raising the minimum income to file income tax at all, or an increase to pension and social assistance levels to offset increased costs of fuel consumption.
Basic economic theory recognizes the existence of externalities and their potential negative effects. To the extent that green taxes correct for externalities such as pollution, they correspond with mainstream economic theory. In practice, however, setting the correct taxation level or the tax collection system needed to do so is difficult, and may lead to further distortions or unintended consequences.
Taxes on consumption may take the "feebate" approach advocated by Amory Lovins, in which additional fees on less sustainable products — such as sport utility vehicles — are pooled to fund subsidies on more sustainable alternatives, such as hybrid electric vehicles.
However, they may simply act as incentives to change habits and make capital investments in newer more efficient vehicles or appliances or to upgrade buildings. Small changes in corporate tax rates for instance can radically change return on investment of capital projects, especially if the averted costs of future fossil fuel use are taken into account.
The same logic applies to major consumer purchases. A "green mortgage" such as a Location Efficient Mortgage, for example, recognizes that persons who do not drive cars and live generally energy-efficient lifestyles pay far less per month than others and accordingly have more to pay a heftier mortgage bill with. This justifies lending them much more money to upgrade a house to use even less energy overall. The result is a bank taking more per month from a consumer's income as utilities and car insurance companies take less, and housing stock upgraded to use the minimum energy feasible with current technology.
Aside from energy, the refits will generally be those required to be maximally accommodating to telework, permaculture gardens (for example green roofs), and a lifestyle that is generally localized in the community not based on commuting. The last, especially, raises real state valuations for not only the neighborhood but the entire surrounding region. Consumers living sustainable lifestyles in upgraded housing will generally be unwilling to drive around aimlessly shopping, for instance, to save a few dollars on their purchases. Instead, they'll stay nearer to home and create jobs in grocery delivery and small organic grocers, spending substantially less money on gasoline and car operation costs even if they pay more for food.

Progressive or regressive?[edit]

Some green tax shift proposals have been criticized as being fiscally regressive (a tax with an average tax rate that decreases as the taxpayer's income increases). Taxing negative externalities usually entails exerting a burden on consumption, and since the poor consume more and save or invest less as a share of their income, any shift towards consumption taxes can be regressive. In 2004, research by the Policy Studies Institute and Joseph Rowntree Foundation indicated that flat rate taxes on domestic rubbish, energy, water and transport use would have a relatively higher impact on poorer households.[5]
However, conventional regulatory approaches can affect prices in much the same way, while lacking the revenue-recycling potential of ecotaxes. Moreover, correctly assessing distributive impact of any tax shift requires an analysis of the specific instrument design features. For example, tax revenue could be redistributed on a per capita basis as part of a basic income scheme; in this case, the poorest would gain what the average citizen pays as ecotaxes, minus their own small contribution (no car, small apartment, ...). This design would be highly progressive. Alternatively, an ecotax can have a "lifeline" design, in which modest consumption levels are priced relatively low (even zero, in the case of water), and higher consumption levels are priced at a higher rate. Furthermore, an ecotax policy package can include revenue recycling to reduce or eliminate any regressivity; an increase in an ecotax could be more than offset by a decrease in a (regressive) payroll or consumption tax. Some proponents claim a second benefit of increased employment or lower health care costs as the market and society adjust to the new fiscal policy (these claims, as with the claim "tax cuts create jobs," are often difficult to prove or disprove even after the fact).
Furthermore, pollution and other forms of environmental harm are often felt more acutely by the poor, who cannot "buy their way out" of being receptors of air pollution, water pollution, etc. Such losses, although externalities, have real economic welfare impacts. Thus by reducing environmental harm, such instruments have a progressive effect.

Ecotax policies enacted[edit]

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An ecotax has been enacted in Germany by means of three laws in 1998, 1999 and 2002. The first introduced a tax on electricity and petroleum, at variable rates based on environmental considerations; renewable sources of electricity were not taxed. The second adjusted the taxes to favor efficient conventional power plants. The third increased the tax on petroleum. At the same time, income taxes were reduced proportionally so that the total tax burden remained constant.
The regional government of Balearic Islands (then held by an ecosocialist coalition) established an ecotax in 1999. The Balearic Island suffer a high human pressure from tourism, that at the same time provides the main source of income. The tax (€1.00 per person per day) would be paid by visitors staying at tourist resorts. This was criticized by the conservative opposition as contrary to business interests, and they abolished the tax in 2003 after seizing back the government.
A variety of ecotaxes (often called "severance taxes") have been enacted by various states in the United States. The Supreme Court of the United States held in Commonwealth Edison Co. v. Montana, 453 U.S. 609 (1981), that in the absence of federal law to the contrary, states may set ecotaxes as high as they wish without violating the Commerce Clause or the Supremacy Clause of the United States Constitution.[6]

Registration taxes[edit]

The Netherlands, Portugal, Canada, Spain and Finland have introduced differentiations into their car registration taxes to encourage car buyers to opt for the cleanest car models.
In the Netherlands, the new registration taxes, payable when a car is sold to its first buyer, can earn the owner of a hybrid a discount up to €6000. Spain reduced taxes for cars that produced less CO2 (some of which will be exempted), while the more consuming, like SPV and 4WD saw their taxes increased.
Austria has had a registration tax based on fuel consumption for several years.

Worldwide implementation[edit]

United Kingdom[edit]

In 1993, the conservative government introduced the Fuel Price Escalator, featuring a small but steady increase of fuel taxes, as proposed by Weizsäcker and Jesinghaus in 1992.[7] The FPE was stopped in 2000, following nationwide protests; while fuel was relatively cheap in 1993, fuel prices were then among the highest in Europe. Under the Blair-Brown government, despite Gordon Brown’s promise to the contrary, green taxes as a percentage of overall taxes have actually fallen from 9.4% to 7.7%, according to calculations by Friends of the Earth.[8]
In a 2006 proposal, the U.K.'s then-Environment Secretary David Miliband had the government in discussions on the use of various green taxes to reduce climate-changing pollution. Of the proposed taxes, which were meant to be revenue-neutral, Miliband stated: "They're not fundamentally there to raise revenue."[9]
Miliband provided additional comments on their need, saying: "Changing people's behaviour is only achieved by "market forces and price signals", and "As our understanding of climate change increases, it is clear more needs to be done."[9]

Ukraine[edit]

Starting in 1999, the Ukrainian government has been collecting an ecological tax, officially known as Environmental Pollution Fee (Ukrainian: Збір за забруднення навколишнього природного середовища), which is collected from all polluting entities, whether it's one-time or ongoing pollution and regardless of whether the polluting act was legal or illegal at the time.[10][11][12]

India[edit]

The Ministry of Environment and Forests, Government of India, asked Madras School of Economics, Chennai, to udertake a study of taxes on polluting inputs and outputs in 2001. Raja Chelliah, Paul Appasamy, U.Sankar and Rita Pandey (Academic Foundation, 2007, New Delhi) recommended eco taxes on coal, automobiles, chlorine,phosphate detergents,chemical pesticides, chemical fertilizers, lead acid batteries and plastics.See Ecotaxes on polluting inputs and outputs, Academic Foundation, New Delhi,2007. The Finance Minister introduced a coal cess at the rate of Rs 50 per ton in 2010.

See also[edit]

References[edit]

  1. Jump up ^ "Environmental Taxation A Guide for Policy Makers" (PDF). http://www.oecd.org/. p. 12. Retrieved 13 March 2015. 
  2. Jump up ^ Pogge, Thomas. "Global Resources Dividend". http://thomaspogge.com/. Retrieved 13 March 2015. 
  3. Jump up ^ Pogge, Thomas W. (January 2001). "Eradicating Systemic Poverty: Brief for a global resources dividend" (PDF). Journal of Human Development 2 (1): 59–77. doi:10.1080/14649880120050246. Retrieved 13 March 2015. 
  4. Jump up ^ Frédéric, Beauregard-Tellier (Frédéric). "Ecological fiscal reform (EFR)". http://www.parl.gc.ca/. Library of Parliament Canada. Retrieved 13 March 2015.  Check date values in: |date= (help)
  5. Jump up ^ "Green taxes 'would hit poor most'". BBC News. October 26, 2004. Archived from the original on July 3, 2012. 
  6. Jump up ^ Elison, Larry M. and Snyder, Fritz. The Montana State Constitution: A Reference Guide. Santa Barbara, Calif.: Greenwood Publishing Group, 2001. ISBN 0-313-27346-4
  7. Jump up ^ Weizsäcker, Ernst Ulrich and Jesinghaus, Jochen. Ecological Tax Reform. London: ZED Books, 1992. Online [1]
  8. Jump up ^ Madden, Peter (2007-11-04). "No excuses for inaction - It is perhaps surprising that business is beginning to make progress on the environment while our elected governments are wasting precious time". The Guardian (London). Retrieved 2008-09-28. 
  9. ^ Jump up to: a b "Miliband Draws Up Green Tax Plan: Environment Secretary David Miliband Has Confirmed the Government Is Holding Discussions On Tackling Climate Change Using Green Taxes". BBC News website. 2006-10-30. Retrieved 2009-06-15. 
  10. Jump up ^ Resolution by the Cabinet of Minister of Ukraine on March 1, 1999 N 303 "On approval of regulations establishing fees for environmental pollution and recovery of this collection» Ukrainian:
  11. Jump up ^ Joint Order of the Ministry of Environmental Protection and Nuclear Safety of Ukraine and State Tax Administration of Ukraine from 19.07.99 #162/379 "On approval of Instruction on procedure of calculation and payment of the environmental pollution тах"Ukrainian:
  12. Jump up ^ Explanation of the Environmental Pollution Fee by the Tax Administration of Ukraine Ukrainian:

External links[edit]

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Wednesday, 8 January 2014

Uneconomic Growth

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Uneconomic growth, in human development theory, welfare economics (the economics of social welfare), and some forms of ecological economics, is economic growth that reflects or creates a decline in the quality of life. The concept is attributed to the economist Herman Daly, though other theorists can also be credited for the incipient idea.[1][2] Note that economic degrowth is different from uneconomic growth (or uneconomic degrowth), it is meant as a reduction of the size of the economy that would bring well-being and sustainability.[3]
The cost, or decline in well-being, associated with extended economic growth is argued to arise as a result of "the social and environmental sacrifices made necessary by that growing encroachment on the eco-system."[4][5] In other words, "[u]neconomic growth occurs when increases in production come at an expense in resources and well-being that is worth more than the items made."[6]


Good vs. bad growth[edit]


Abandoned boats in Moynaq, Uzbekistan. This former beach is now 150 km away from the Aral Sea. From the 1930s the Soviet authorities diverted the rivers for cotton irrigation. Already in 1968, the desiccation of the sea was seen as "inevitable".[7] The Uzbekistani authorities still prefer exportable cotton and oil prospecting over restoring the South Aral Sea.[8]
Uneconomic growth often reflects poorly developed or poorly planned growth, rather than growth that is inherently bad. For example, if one assumes that Atlantic hurricanes and Pacific typhoons have intensified in recent years due to human-caused global warming, then a rapid surge in automobile ownership in China, Brazil, and India could be seen as uneconomic growth. This is based on the assumption that significantly increasing the number of internal combustion engines worldwide would increase global warming, and that the economic damage from global warming would more than offset any economic growth brought about from the increase in automobiles; however, if the new automobiles were ethanol[citation needed]-fuelled or battery powered from non-greenhouse-gas-producing energy sources such as solar, wind, or nuclear instead of petroleum-fuelled, the effect on global warming might be very minor and not uneconomic at all (of course, this is contingent on a massive change in energy production in China, where most power is produced by burning coal at the moment). Note that the hypothetical surge in automobiles might be 'uneconomic growth' from a global perspective, but 'good economic growth' from those countries' perspective (an example of an externality). This means from the perspective of a growing economy like China, or other smaller nations, it would be far more fair for already-developed nations like the United States to reduce the number of vehicles or limit their own CO2 production rather than injuring or limiting the developing nations ability to grow (which the US and other nations were free to do in the days before carbon emissions were considered a major concern).

The limits to growth[edit]

The "limits to growth" debate has some roots in Malthusianism. Much of the debate in recent times was prompted by the 1972 Club of Rome study Limits to Growth, which considers the ecological impact of growth and wealth creation. Many of the activities required for economic growth use non-renewable resources. Many researchers feel these sustained environmental effects can have an effect on the whole ecosystem. They argue that the accumulated effects on the ecosystem put a theoretical limit on growth. Some draw on archaeology to cite examples of cultures they say have disappeared because they grew beyond the ability of their ecosystems to support them.[9] The argument is that the limits to growth will eventually make growth in resource consumption impossible.
Others are more optimistic and believe that, although localized environmental effects may occur, large-scale ecological effects are minor. The optimists suggest that if these global-scale ecological effects exist, human ingenuity will find ways of adapting to them.
The rate or type of economic growth may have important consequences for the environment (the climate and natural capital of ecologies). Concerns about possible negative effects of growth on the environment and society led some to advocate lower levels of growth, from which comes the idea of uneconomic growth, and Green parties which argue that economies are part of a global society and a global ecology and cannot outstrip their natural growth without damaging them.
Canadian scientist David Suzuki argued in the 1990s that ecologies can only sustain typically about 1.5–3% new growth per year, and thus any requirement for greater returns from agriculture or forestry will necessarily cannibalize the natural capital of soil or forest. Some think this argument can be applied even to more developed economies.

The role of technology, and Jevon's paradox[edit]

Mainstream economists would argue that economies are driven by new technology—for instance, we have faster computers today than a year ago, but not necessarily physically more computers. Growth that relies entirely on exploiting increased knowledge rather than exploiting increased resource consumption may thus not qualify as uneconomic growth. In some cases, this may be true where technology enables lower amounts of input to be used in producing the same unit of product (and/or it reduces the amount or hazardousness of the waste generated per unit product produced) (e.g., the increased availability of movies through the Internet or cable television electronically may reduce the demand for physical video tapes or DVDs for films). Nonetheless, it is crucial to also recognise that innovation- or knowledge-driven growth still may not entirely resolve the problem of scale, or increasing resource consumption. For instance, there might likely be more computers due to greater demand and replacements for slower computers.
The Jevons Paradox is the proposition that technological progress that increases the efficiency with which a resource is used, tends to increase (rather than decrease) the rate of consumption of that resource.[10][11] For example, given that expenditure on necessities and taxes remain the same, (i) the availability of energy-saving lightbulbs may mean lower electricity usage and fees for a household but this frees up more discretionary, disposable income for additional consumption elsewhere (an example of the "rebound effect")[12][13] and (ii) technology (or globalisation) that leads to the availability of cheaper goods for consumers also frees up discretionary income for increased consumptive spending.
On the other hand, new renewable energy and climate change mitigation technology (such as artificial photosynthesis) has been argued to promote a prolonged era of human stewardship over ecosystems known as the Sustainocene. In the Sustainocene, "instead of the cargo-cult ideology of perpetual economic growth through corporate pillage of nature, globalised artificial photosynthesis will facilitate a steady state economy and further technological revolutions such as domestic nano-factories and e-democratic input to local communal and global governance structures. In such a world, humans will no longer feel economically threatened, but rather proud, that their moral growth has allowed them to uphold Rights of Nature."[14]

See also[edit]

Further reading[edit]

References[edit]

  1. Jump up ^ Daly, H. 2007. Ecological economics: the concept of scale and its relation to allocation, distribution, and uneconomic growth. Pp. 82-103 in H. Daly. Ecological Economics and Sustainable Development: Selected Essays of Herman Daly. Cheltenham, UK: Edward Elgar.
  2. Jump up ^ Daly, H. 1999. Uneconomic growth and the built environment: in theory and in fact. In C.J. Kibert (ed.). Reshaping the Built Environment: Ecology, Ethics, and Economics. Washington DC: Island Press.
  3. Jump up ^ http://events.it-sudparis.eu/degrowthconference/en/
  4. Jump up ^ Daly, H. 1999. Uneconomic growth in theory and in fact. The First Annual Feasta Lecture, Trinity College, Dublin, 26th April. Available from: http://www.feasta.org/documents/feastareview/daly.htm. Accessed 28 March 2008.
  5. Jump up ^ Daly, H. and Farley, J. 2004. Ecological Economics: Principles and Applications. Washington: Island Press.
  6. Jump up ^ Daly, H. 2005. Economics in a full world. Scientific American 293(3): 100-107.
  7. Jump up ^ Bissell, Tom. "Eternal Winter: Lessons of the Aral Sea Disaster". Harper's, April 2002, pp. 41–56.
  8. Jump up ^ The return of the sea, Times Online, June 23, 2007
  9. Jump up ^ Brander, James A.; Taylor, M. Scott (March 1998). "The Simple Economics of Easter Island: A Ricardo-Malthus Model for Renewable Resource Use". The American Economic Review 88 (1). Retrieved 2006-03-12. 
  10. Jump up ^ Jevons, W.S. 1865. The Coal Question: An Inquiry Concerning the Progress of the Nation, and the Probable Exhaustion of Our Coal-Mines. London: Macmillan and Co.
  11. Jump up ^ Czech, B. 2006. If Rome is burning, why are we fiddling? Conservation Biology 20 (6): 1563-1565.
  12. Jump up ^ Binswanger, M. 2001. Technological progress and sustainable development: what about the rebound effect? Ecological Economics 36(1): 119-132.
  13. Jump up ^ Herring, H. 2000. Is energy efficiency environmentally friendly? Energy & Environment 11(3): 313-325.
  14. Jump up ^ Thomas Faunce. 'Artificial Photosynthesis Could Extend Rights to Nature. The Conversation 2 July 2013. https://theconversation.com/artificial-photosynthesis-could-extend-rights-to-nature-15380 (accessed 2 July 2013).

Related reading[edit]

  • Baker, Linda (May–June 1999). "Real Wealth: The Genuine Progress Indicator Could Provide an Environmental Measure of the Planet's Health". E Magazine: 37–41. 
  • Cobb, Clifford; Ted Halstead, Jonathan Rowe (October 1995). "If the GDP Is Up, Why Is America Down?". Atlantic Monthly: 59–78. 
  • Takis Fotopoulos: "The Multidimensional Crisis and Inclusive Democracy", Athens 2005. English online version:[1]
  • Rowe, Jonathan; Judith Silverstein (March 1999). "The GDP Myth: Why 'Growth' Isn't Always a Good Thing". Washington Monthly: 17–21. 
  • Rowe, Jonathan (July–August 1999). "The Growth Consensus Unravels". Dollars & Sense: 15–18, 33. 

External links[edit]

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