Green Economics Can Balance Government Budgets
|December 31, 2004||Posted by Staff under Progress Report, The Progress Report|
Green Economics Can Balance Government Budgets
Keep Election Promises With Green Tax Shifting, Urges de Jong
The Green Party of Ontario recommends a province-wide budger based on shifting taxes away from production and human initiative, and onto such things as pollution, sprawl and the monopolizing of natural resources. This proposal would strengthen any local, regional or national government’s budget, and would place fiscal responsibility where it belongs.
Applying green economics would allow Ontario Premier Dalton McGuinty to balance the province’s books, Green Party of Ontario leader Frank de Jong advised.
“The Ontario government should take advantage of the deficit and view it as an opportunity to address urgent problems such as climate change, urban sprawl, and teacher and nurse shortages,” said de Jong. “Rather than cutting services or increasing income taxes, the Liberal government should use tax shifting to simultaneously fulfill their campaign promises and lay the groundwork for reducing the deficit,” he added.
Used increasingly worldwide, tax shifting allows governments to shift taxation away from income onto the consumption of natural resources and the creation of pollution. One immediate result of tax shifting is that it encourages employers to use resources more efficiently. Another immediate result is more jobs. The long-term result is lower health care costs, lower operating costs for transit and municipal services, lower public energy bills, higher productivity in the provincial economy and happier, healthier people. North American politicians are crazy not to do this; we are 20 years behind Europe and falling fast.
As the Worldwatch Institute puts it, “For progressives, [tax shifting] has the appeal of protecting the environment by making the polluter pay and reducing unemployment. For conservatives, it offers the advantage of using the market, rather than regulatory agencies, to protect the environment, and allows for cuts in much-resented income or sales taxes that may inhibit constructive economic activity.” And who could have a problem with that?
Green tax reforms such as tax shifting have been identified by the U.N as a “key framework condition” for sustainable development. In addition to protecting and encouraging the wise use of natural resources, tax shifting has the benefit of ensuring that those who use services or resources are directly responsible for all associated costs including taxes.
Numerous possibilities for green tax reform exist that the Liberals should consider in their efforts to keep their election promises. These include:
- URBAN SPRAWL
Applying development charges to cover the full cost of development will end unfair subsidies for roads, sewers, water and hydro paid by businesses and residents. Reducing or eliminating development charges for infill and low energy communities will stimulate growth in these sectors, without costs to government.
- AFFORDABLE HOUSING
Shifting municipal taxes away from building values and onto land values will encourage developers to build more units on less land. To avoid taxation developers will construct as much affordable housing as the market requires without government subsidies.
- MUNICIPAL NEW DEAL
The Liberal government should apply an additional two cents per liter gas tax dedicated to funding province-wide transit. Charging closer to the true cost of gasoline will contribute to reducing urban sprawl, vehicle gridlock, smog, and climate change. Provincially applied extended producer warranties and true-cost pricing for consumer goods would eliminate garbage disposal costs.
- ONE PER CENT TAX SHIFT
The Green Party suggests the Ontario government shift 1% of personal income taxes onto resource consumptions, pollution creation, and land per year for the next four years. In the 2004-5 budget this revenue neutral shift would reduce government revenue from personal income taxes by $1.9 billion, but would raise an equivalent amount from resource consumption and land and pollution taxes.
- REDUCING CLASS SIZES
The 1% tax shift would save Ontario school boards around $90 million in staffing costs per year, without reducing take home salaries. Over four years this would save school boards enough to cover the estimated $340 million cost of reducing class sizes to 20 between kindergarten and Grade 3.
- NURSING SHORTAGE
While maintaining the same pay after taxes, the 1% tax reduction on incomes would reduce the yearly cost of employing doctors, nurses and maintenance staff by about $200 million per year. Cumulating over 4 years this would be enough to cover the estimated $800 million cost of the Liberal campaign promised to hire 8,000 more nurses.
- PHASING OUT COAL
The Ontario Medical Association reports that air pollution costs Ontario more than $10 billion per year in health care costs, lost work time, and other quantifiable expenses, not to mention the more than 2,000 deaths caused by bad air quality. To keep their promise of shutting down coal-fired electricity, the Liberals should incorporate the real costs of electricity into the kw/hour price making energy efficiency cost effective. As well, Ontario Power Generation should increase its electricity production capacity from Niagara Falls and refit its coal-fired generators to use natural gas.
“Applied collectively, these reforms would help the province balance the needs of commerce with the needs of our communities while stimulating economic growth and reducing individual taxes,” de Jong said. “Can we afford to blow this opportunity up a smokestack?”
For more information about tax shifting:
More on ecological fiscal reform (EFR) in Canada and around the world:
The Green Party of Ontario
Green Parties Worldwide
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