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Taxing the Planet

There are many examples of introducing extra charges for producers and consumers for environmental reasons. The money is usually used for proper disposal, recycling funding eco-research and buying green equipment to mitigate the effect of pollution. These charges are likely to increase with time and may soon take the form of tax for everyone. Great news, eh! Taxes are never considered a good thing, unless deemed fair. How to make eco-taxation fair?

Let’s consider the following example – suppose you have a choice what electricity to use at home – the one coming from the nearby coal electric plant, or the one from the newly built hydrogen-fuelled or solar station.

moneyIf the clean energy comes to your house at the same price perhaps people would prefer it to the dirty one. The thing is that clean energy projects are very expensive and the produced electricity is much more costly, unless subsidised by the state. So you would have paid for it with your taxes beforehand. The same for many people, who do not use the clean electricity but pay taxes – is this fair? Well, it is, because the effect (or the lack of effect in this case) is not for the consumer only, but for everyone. Therefore, everyone should pay for the public good – clean environment. So rule N1 in environmental taxation should be “if you do not pollute everybody should pay”.

Now let’s say that Nico van den Hoorst uses more electricity (and would pollute more) than Janos Kovacs who uses very little. They still pay equal for the green electricity through their taxes – is this fair? I do not think so. People who pollute more should pay more for it. So we cannot have the same tax burden for everyone, rather we should introduce taxes according to energy consumption (and maybe income), regardless of whether one uses dirty electricity or not. Like this it looks like VAT, or better PAT – Pollution Added Tax. The difference is that everyone pays for clean energy even though they do not use it. They still can use the planet –this is what the tax is really for. So in a way we are taxing consumption even if it eco-friendly.

Another type of eco-tax is increasing the price of certain products so they are used less and pollution decreases. garYou travel by car or plane – you pay extra for the environmental damage of the burned fuel. If you buy chemical products or electronics produced at a cost for the environment, you pay for it. Like this the more one consumes (beyond electricity) the more he/she pays. This is the classical indirect consumption tax. It is easier to collect, so the chance that states decides to use it is quite high. To certain extend it exists today in many forms, e.g. 3-5% recycling charge for all new electronic equipment. This is the second rule for environmental taxation “if you pollute you pay for it”. I wonder if this is OK.

But is it fair for the consumer to pay for the pollution he causes through the service/products he uses. He has not invented the service, has not made it bad for the environment, and does not make profits – why should he be responsible?! On the other hand, the company profits from the service it offers, does not make it clean (enough) and on top of that uses all kids of PR techniques and marketing tricks to tempt customers and show itself as a saint dedicated to “creating opportunities” and “guaranteeing comfort” and “clean coal” and what have you. This entails some responsibility, I believe. It is undoubted fact that we do not consum as much as we need (or even as much as we want) but as much as the companies and their PR & marketing departments tell us. So if there is a green tax in whatever form, it should be regulated in a way that it is shared between customer and company. They both benefit from their relationship and both contribute to the pollution. The problem is that pollution is no good for man and there is hope that we eventually develop some form of environmentality. For a company though, all that matters is the profit and there is no such chance. So it will never understand – that’s why we have to make companies act as if they understood. And take their share of the burden through decreasing profits and investing more in green processes. So: extra charges for consumption – YES. Paid entirely by consumers – NO.

Eventually the question becomes how to create a reliable system of reporting the environmental footprint for each and every product and each and every sector? Shall we have some eco-tax-free human activities such as medical care or environmental research. And shall we tax everything or shall we impose limits on emissions? Or both? A lot of questions! Please, help. Help save the planet.

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