Joe

With all respect, this may have been better placed in EnviroNet, don't
you think? I've addressed this reply there, as well. If you wish to add
a rejoinder, maybe you would care to delete the LF address?

Europe has a problem with such envirotaxes. Truck operators buy as much
of their fuel as possible in those countries where the fuel is cheapest.
This reduces the effectiveness of such taxes. Because of this, the EU
has proposed to make taxes uniform throughout the uniform at the average
of current values. This is causing a furore. The governments of such
countries as the UK, where the taxes are stupendously high, are kicking
up stink because of a considerable loss of revenue. Truck operators and
oil companies in countries where taxes are low are equally kicking up
stink because they foresee a loss of profitability and a drop in sales.
They are threatening widespread road blockages. Its a lose-lose
situation envisigeable only by such a megalobureaucracy as the EU. (This
country is due to enter the EU on 1 Jan 2004 - God help it! It hasn't a
clue what it has let itself in for!)

Best regards,

Brian

Joe Fjelstad wrote:
>
> The following is forwarded without comment for the information of
> those in this forum
>
> Eco-Economy Update 2002-10
> For Immediate Release
> Copyright Earth Policy Institute 2002
> July 25, 2002
>
> http://www.earth-policy.org/Updates/Update14.htm
>
> Bernie Fischlowitz-Roberts
>
> Many countries have implemented taxes on environmentally destructive
> products and activities while simultaneously reducing taxes on income.
> The
> scale of tax shifting has been relatively small thus far, accounting
> for
> only 3 percent of tax revenues worldwide. It is increasingly clear,
> however,
> that countries are recognizing the power of tax restructuring to
> reach environmental goals.
>
> The market price for a gallon of gasoline, for example, reflects the
> cost of
> drilling, extracting, refining and transporting the oil. The market
> price
> does not account for the air pollution and acid rain produced by
> burning
> gasoline, nor its contribution to climate change as evidenced by
> rising
> temperatures, rising sea levels, and more destructive storms. Raising
> taxes
> on environmentally destructive products and activities is designed to
> more
> closely align the market prices with their actual costs.
>
> Germany, a leader in tax shifting, has implemented environmental tax
> reform
> in several stages by lowering income taxes and raising energy taxes.
> In
> 1999, the country increased taxes on gasoline, heating oils, and
> natural
> gas, and adopted a new tax on electricity. This revenue was used to
> decrease
> employer and employee contributions to the pension fund. Energy tax
> rises for many energy-intensive industries were substantially lower,
> however, reflecting concerns about international competitiveness.
>
> In 2000, Germany further reduced payroll taxes and increased those on
> motor
> fuels and electricity. As a result, motor fuel sales were 5 percent
> lower in
> the first half of 2001 than in the same period in 1999. Meanwhile,
> carpool
> agencies reported growth of 25 percent in the first half of 2000. Thus
> far,
> Germany has shifted 2 percent of its tax burden from incomes to
> environmentally destructive activities.
>
> One part of the United Kingdom's environmental tax reform involved a
> steadily increasing fuel tax known as a fuel duty escalator, which was
> in
> effect from 1993 until 1999. As a result, fuel consumption in the road
>
> transport sector dropped, and the average fuel efficiency of trucks
> over 33
> tons increased by 13 percent between 1993 and 1998. Ultra-low sulfur
> diesel
> had a lower tax rate than regular diesel, which caused its share of
> domestic
> diesel sales to jump from 5 percent in July 1998 to 43 percent in
> February
> 1999; by the end of 1999, the nation had completely converted to
> ultra-low
> sulfur diesel.
>
> The Netherlands has also shifted taxes to environmentally destructive
> activities. A general fuel tax, originally implemented in 1988 and
> modified
> in 1992, is now levied on fossil fuels; rates are based on both the
> carbon
> and the energy contents of the fuel. Between 1996 and 1998, a
> Regulatory
> Energy Tax (RET) was implemented, which taxed natural gas,
> electricity, fuel oil, and heating oil. Unlike the fuel tax, which was
>
> designed principally for revenue generation, the RET's goal was to
> change
> consumer behavior by creating incentives for energy efficiency. To
> maintain
> competitiveness, major energy users were exempted from the taxes, so
> this
> tax fell mainly on individuals.
>
> Since sixty percent of the revenue from these Dutch taxes came from
> households, the taxes were offset by decreasing income taxes. The 40
> percent
> of revenue derived from businesses was recycled through three
> mechanisms: a
> reduction in employer contributions to social security, a reduction in
>
> corporate income taxes, and an increased tax exemption for self-
> employed people. This tax shift has caused household energy costs to
> increase, which has resulted in a 15-percent reduction in consumer
> electricity use and a 5- to 10-percent decrease in fuel usage. (See
> http://www.earth-policy.org/Updates/Update14.htm )
>
> Finland implemented a carbon dioxide (CO2) tax in 1990. By 1998, the
> country's CO2 emissions had dropped by almost 7 percent. Finland's
> environmental taxes, like those in most countries, are far from
> uniform: the
> electricity tax is greater for households and the service sector than
> for
> industry.
>
> Sweden's experiment with tax shifting began in 1991, when it raised
> taxes on
> carbon and sulfur emissions and reduced income taxes. Manufacturing
> industries received exemptions and rebates from many of the
> environmental
> taxes, putting their tax rates at half of those paid by households. In
> 2001,
> the government increased taxes on diesel fuel, heating oil, and
> electricity while lowering income taxes and social security
> contributions.
> Six percent of all government revenue in Sweden has now been shifted.
> This
> has helped Sweden reduce greenhouse gas emissions more quickly than
> anticipated. A political agreement between the government and the
> opposition
> required a 4-percent reduction below 1990 levels by 2012. Yet
> by 2000, emissions were already down 3.9 percent from 1990—in large
> measure
> due to energy taxes.
>
> The myriad exemptions given to energy-intensive industries in existing
> tax
> shift programs, created out of legitimate competitiveness concerns,
> slow the
> creation of more effective tax systems. Using border tax
> adjustments—where
> companies have environmental taxes rebated to them upon export and
> have
> domestic environmental taxes added to imports—
> can ensure international competitiveness without tax exemptions.
>
> Eliminating subsidies to environmentally destructive industries will
> also
> help the market send the right signals. Worldwide, environmentally
> destructive subsidies exceed $500 billion annually. As long as
> government
> subsidies encourage activities that the taxes seek to discourage, the
> effectiveness of tax shifting will be limited.
>
> If properly constructed, tax shifts can help make markets work more
> effectively by incorporating more of the indirect costs of goods and
> services into their prices and by changing consumer and producer
> behavior
> accordingly. The emergence of a world-leading wind turbine industry in
>
> Denmark, for example, is one result of Danish taxes on fossil fuels
> and
> electricity,
> which are among the highest in the world. These measures have also
> spurred
> sales of energy-efficient appliances and encouraged other
> energy-saving
> behavior.
>
> Expanding the tax base to encompass more products and services with
> deleterious environmental impacts would greatly enhance the
> effectiveness of
> tax shifting. Aviation fuel, for example, is currently tax-free
> worldwide,
> despite airplane emissions causing 3.5 percent of global warming.
> However,
> recent European discussions of imposing taxes on jet fuel are a
> promising development. Such taxes might slow the projected growth in
> worldwide air travel and encourage manufacturers to make efficiency
> improvements that lower jet fuel consumption.
>
> The goal of tax restructuring is to get the market to tell the
> ecological
> truth. Thus far, tax shifts have been limited in scope and have
> produced
> positive, if modest, results. Creation of an eco-economy calls for tax
>
> shifts on a broader scale, and of much larger magnitude, in order for
> prices
> to incorporate environmental costs and to produce the requisite
> changes in
> individual
> and collective behavior.
>
> Additional data and information sources at www.earth-policy.org or
> contact
> [log in to unmask]
> For reprint permission contact [log in to unmask]
>
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