Ecological Tax Reform Makes News
Anglican Bishop Calls for Green Tax Shift
People should be taxed on what they use of the earth's resources, not what they earn.
This message is drawing more and more support all over the globe. Here are portions of a recent article in the London Guardian (UK).
Paying what we owe
by James Jones
November 22, 2004The modern world has lost much of its connection with the earth. It is as serious as shoppers losing sight of their bank balance. For consumers of the earth's resources there is no check on our profligacy; we are so removed from the consequences of our actions that we live comfortably in denial, ignoring the prophets of doom who predict an impending environmental crisis of epic proportions.
Planet Earth possesses an extraordinary capacity, but it is not limitless. How then shall we live and, in particular, how should those in business and industry deal and trade in the earth's resources? Taxation provides for a degree of redistribution of wealth, although national and global evidence suggests that the gap between rich and poor is growing larger.
The most substantial tax revenue comes from taxing income, especially labour. The time has come for all political parties to rethink fundamentally this balance. We should gradually shift from taxing labour to levying taxes on the use of original resources.
There are two reasons. First, this would exercise more of a discipline on our use of original material, which would encourage us to conserve and replenish the source. Second, it would stimulate labour and encourage us to be creative and innovative in our use of original material. Current industry and business seem to be based upon using minimum labour in relation to resources used; we urgently need to invert the ratio into the minimum amount of resources used in relation to labour.
Taxation has always been a form of value-driven social engineering. Tax differentials and tax breaks affect behaviour. Changing the balance of taxation away from labour to resource would suit all three major political parties. Conservatives would welcome the rewarding of enterprise, Liberal Democrats would value the lessening impact on the environment, and Labour would see it as a means of sharing goods more fairly.
Changes in the tax regime would need to be introduced gradually, but shifting it from one area to another would keep the overall tax take the same and make the change tax neutral to the economy. Interventions would be needed to ensure that the poor and unemployed had access to the basic requirements for human flourishing.
The Joseph Rowntree Foundation has just published research on reducing the impact of green taxes and charges on low-income households. There are real concerns that green taxes could hit the poor disproportionately, but they believe it is possible to devise strategies that would relieve hardship. For example, all water could be metered and the first x litres per household member would be free. Thereafter water would be taxed so that those using it for car washing, large gardens, swimming pools, etc would pay for their water according to use. This would drive down consumption while at the same time protecting the needs of low-income households.
Shifting the burden of tax from labour to resource in today's world would mean that the most successful businesses would be those which deployed labour as creatively and innovatively as possible so as to use the minimum amount of original material in their products. Much thinking has already been done about our use of carbon and how we might reduce the amount of emissions. "Contraction and convergence" has been proposed to ensure a fairer use of carbon across the developed and developing worlds. The aim is to redistribute all nations' carbon credits so as to exert a more disciplined, moral and responsible use of carbon.
Excessive carbon emissions by richer countries change the climate, warming the globe, melting ice, raising sea-levels and flooding some of the poorest countries in the world. Allowing countries to trade in carbon credits is a form of taxation that disciplines and drives down the use of original resource and allows for its absorption within the capacity of the planet.
It is for economists and politicians, together with the business community, to decide on how exactly we share the earth's resources with the sense of responsibility that the "rich" should have for the "poor", and the present should have for future generations. As a pastor who sees the consequences of poverty both in this country and in others, I urge those in business to embrace an ethic of the earth and a greater sense of social responsibility. Ultimately, decisions taken will depend on moral values; we should not spend the earth and squander the resources that belong also to future generations.
The Rt Rev James Jones is the bishop of Liverpool.
Humorous speech that explains Green economics
Green Tax Shift Headquarters
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The Green Economics Resource Center
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