While an economist talks taxes, smart leaders levy two smart ones
Tax emissions, rebate citizens, as the doctor order in the 19th century
Good news is a welcome happening. We’re pleased to present -- post-trimming -- three 2008 articles: (1) “What constitute the essential ingredients of a good tax regime?” in Money Matters at LiveMint on Feb 22 by Gaurav Taneja; (2) “Mayor gives green light to CO2 charge to tackle climate change”, a press release from the office of the Mayor of London on Feb 2; and (3) “The ‘Green’ Budget: Carbon Footprint; Province to give cash, tax breaks to greener households” by Dene Moore of the Canadian Press in the Globe and Mail on Feb 20.
by Jeffery J. SmithTaneja: Is taxation a democratic theft? Aggression by tax authorities suggests it is. Plus, government does impose its taxes and can return a service of lesser value.
What might be a good tax? Adam Smith answered it’d be: equitable (based upon the ability to pay); certain (unavoidable by all); convenient (hassle-free, unlike IRS forms); and cheap to collect (needing only a small bureaucracy to enforce).
Henry George, author of the classic Progress and Poverty a century after Smith, added that the tax must bear as lightly as possible upon production, minimizing the excess burden or deadweight loss. He went on to say that the tax should fall as directly as may be upon the ultimate payers.
JJS: Bingo. Two new taxes below actually make life better for all living things. They meet a modern requirement for sanity in taxation: the "polluter pays" principle.
Mayor’s office: Ken Livingstone, the Mayor of London, gave the green light to the world's most ambitious scheme to reduce the contribution of urban traffic to greenhouse gas emissions.
Cars with the highest emissions (over 225g of CO2 per kilometer) will pay a daily charge of £25 to drive in the central London Congestion Charge Zone. Such cars -- high powered sports cars and luxury vehicles -- constitute 17% of downtown London traffic.
Cars with the lowest CO2 emissions (less than 120g of CO2 per kilometer) will receive a 100% discount. They constitute 2% of London traffic.
The move follows the introduction of the groundbreaking central London congestion charge in 2003. It has cut both traffic and congestion and vehicle emissions in central London. More people use public transport and bicycle, plus road safety has improved.
JJS: Road traffic is one of the biggest contributors to climate change. Yet note that citizens drive less where trip distances are shorter. Trips are shorter where owners use land efficiently. And rather than withhold parcels for speculation, owners choose to put and keep sites at highest and best use when prodded to do so by land dues or a tax on the value of their location.
Moore: From cleaner fuels to greener washing machines, the British Columbia government is asking individuals to take on climate change.
The Liberal government's 2008 budget includes funding for home energy improvements and tax breaks on energy-efficient appliances.
Car buyers will get up to a $2,000 reduction in sales tax on fuel-efficient vehicles, and residents will even get a little green from the government to get them started.
In June, the government will send out $100 "Climate Action Dividends" to every man, woman and child in the province "to help people adopt greener lifestyles."
In addition to across-the-board cuts in personal income taxes -- 2% this year and 5% next year on income up to $70,000 -- low-income British Columbians will get a climate action tax credit of $100 a year per adult and $30 per child, to be paid quarterly with the GST tax credit.
The cash incentives will be offset by the province's carbon tax, the first in Canada to apply to consumers.
The carbon tax will increase the cost of gasoline by 2.41 cents a litre and natural gas by 49.88 cents a gigajoule as of July 1. By 2012, the cost of gasoline will rise by 7.24 cents a litre.
The cost of the tax to individual British Columbians will depend on the choices they make. Those who make changes and reduce their "carbon footprint" can save more than enough in household expenses to offset the carbon tax.
Driving one day less a week can save $233 a year once the tax kicks in. Taking public transit can save $185, walking to work $197, and weatherizing windows and doors can shave off $44 a year.
That's not to mention the savings on insurance costs, parking, or the federal income tax credit for transit.
JJS: Wow. The logic of cutting counterproductive taxes while sharing a rent (this one for using the atmosphere, a natural resource) spreads. And in our lifetime! Oh, Canada! May the rest of the Pacific Northwest and the world follow.
Jeffery J. Smith runs the Forum on Geonomics.
Green Tax Shift Drawing More Attention
Collecting The Cost of Gas Guzzling
World Economy: What Does Carbon Cost?
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