Taxing ‘bads’ not ‘goods’

Bob Edlin has an interesting article in today’s Independent Financial Review (off-line) where he examines each party’s tax positions in the lead up to the 2008 election.  All the other parties mentioned in the article take the opportunity to chant ‘tax cuts, tax cuts’ while the Jeanette reiterates the Greens’ position that the debate needs to be about shifting tax, not cutting tax.

“Most parties look at tax from a conventional perspective: they would continue to collect most of their revenues by taxing personal incomes and company profits.

Only the Green Party is looking at more radical measures.  It would shift taxes on to an ecological basis, moving some taxes off ‘goods’ such as work and enterprise (personal income and profits) and on to ‘bads’ – waste, pollution and overuse of scarce resources for example.”

10 Comments Posted

  1. BJ thanks, that is clear, although what company “locks up profit” rather than reinvest or pay dividends to shareholders is beyond me. I’d rather assets were managed to make a return on capital than not, but that is a different point.

    Toad, of course it only partly rations by price because who the hell defines “continuation of water supply and reasonable personal consumption”. What if I save more than that? What’s wrong with people paying for the water they use? Frankly who is deprived of “reasonable water consumption”? What’s wrong with all people making tradeoffs with their income regarding the real price of goods and services? Why is water different from food?

  2. Toad – if you and the Green Party think that the above policy provision is detailed, you need some oxygen or a good dose of reality. “Encouraging” councils is bit like chaning the Bob the Builder theme song from “can we fix it – yes we can” to “can we fix it – yes we will encourage”. COME ON you sound like the Nats or Labour with that kind of language.

    You are still left the the most important aspect of HOW? Who pays (both for measurement systems and regulatory roles), who does the requiring, who gets the money and for what purpose, what pricing structure will be implemented etc, etc. I suspect the same issues would come up if you tried taxing other eco-items. It is this sort of detail that I want to have access to in the prospective political parties policies. Otherwise what am I really voting for?

  3. taxing bads sounds great but if it works & bads are diminished, you’ll have to switch back to traditional forms of tax or find some new bads to tax. this will lead to the perception that people are being punished for their compliance success in eliminating bads.
    presently taxes are not seen as punitive but as the necessary provision of funding for government activity.
    you can manage this public relations aspect somewhat with some window dressing around the name: don’t call it a tax, & don’t have it administered by the inland revenue department.
    call it a “social tariff” if you like.
    but don’t have it administered by the conservation department either, or any other department which would work better if it retains the love & respect of the public.
    in fact create a new “social tariff department” have it collect the tariffs over & above normal revenue tax collected by the ird & don’t cut other taxes at all – deposit the tariffs into a “global warming preparedness fund” & other such worthy projects

  4. libertyscott said: The Green policy on water is devoid of reason, water is a scarce resource, yet the Greens oppose treating it as a commodity and using the price mechanism to ration its use.

    What about this policy point, Liberty?

    2.2 Allow councils to adopt a progressive charging system for water when deemed necessary. In such a system the first unit, which provides for commencement and continuation of water supply and reasonable personal consumption, will be funded from rating revenue and free of direct user charges, while additional units may incur progressively higher direct charges.

    Does this not do precisely what you argue for – using the price mechanism to ration its use? It also does what you don’t seem to care about – ensuring that no-one is deprived of reasonable water consumption because they cannot afford it. I would suggest it could better say “Encourage councils …” rather than just “Allow councils …” though.

  5. Liberty..

    We never said “Free”

    The Green Party will:

    1. Ensure that water, itself, remains under public control and is managed through appropriate local, regional and national government mechanisms, even though the infrastructure for the provision of water may be privately or community owned.
    2. Introduce mandatory metering on all water takes for commercial use.
    3. Support regional councils/unitary authorities placing a ‘resource use levy’ on commercial users for all water used on a volume basis. Such a levy should reflect all direct and indirect costs of water management and monitoring and be structured in a way that encourages efficient use of water.
    .
    .
    .

    I think that private use metering and levies are probably in the cards eventually but they aren’t in the policy. They aren’t impossible and they aren’t rejected… but they aren’t in the policy.

    The policy rejects privatization of the supply and it rejects companies locking up the resource to make profits.

    The distinction is quite clear I think.

    respectfully
    BJ

  6. The logical result of taxing ‘bad things’ is that such things should happen less, shrinking the size of the state.

    The Green policy on water is devoid of reason, water is a scarce resource, yet the Greens oppose treating it as a commodity and using the price mechanism to ration its use. Either people should pay for what they use, encouraging efficient usage of it, or you accept wastage and inefficiency. You can’t play this “it should be free and not for profit” and then complain about overuse and poor quality infrastructure that you want NON-users to pay for through taxes.

  7. I agree that people have a basic right to water for their domestic and stock requirements etc etc. I am refering to the situation where water is used to make money, for example industrial irrigation (which dwarfs domestic usage). The Greens policy appears very light on detail in this regard, which I might add is not out of step with the other political parties. Surely what the Greens are promoting as alternative taxation of ‘bads’ not ‘goods’ and on an “ecological basis” must also consider industrial water use under this banner. Water is probably the most critical input to any industrial production, seems like a good condidate for taxation if you ask me. Furthermore, establishing a public revenue stream that is proportional to the volume used would create an incentive for efficient use, as well as benefit water related programmes and environmental restoration and enhancement.

  8. The current Green Party water policy is here including comments on water being a public good and that everyone has the right of access to a safe and secure supply of high quality, affordable water for drinking and sanitation. It alos says ‘The public supply of domestic water must be retained or returned to public ownership. Domestic water must not be treated as a commodity to be sold for profit.’ No specific mention of tax.

  9. A capital gains tax might free up capital for business to invest in increased productivity, according to a possibly-clever-someone in the letters to the editor of the Herald today. And as someone else notes, ONLY the Greens would do?

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