Green Tax Shift

A Green Tax Shift is a way to address global warming, create jobs, save the environment, strengthen our economy and reduce our dependence on middle eastern oil, all at the same time. For greenhouse emissions, it could involve reducing income tax for low income earners and increasing the tax on coal (=electricity), oil, gas, beef, milk and cement. The increase in tax on each product would depend on the amount of greenhouse emissions from it. The decrease in income tax would be set so that government revenue was unchanged. Income tax at the low end would be the best option for the decrease because it would result in the least change in the distribution of wealth and would create more jobs. Petrol will not bear the brunt of the price increases because it causes only a small fraction of our greenhouse emissions.

This method of reducing greenhouse emissions is preferred by economists. If you consider the negative impacts of global warming to have real economic value (ie, would people pay to get rid of them?) then it will actually strengthen the economy. This is because not charging companies for the right to pollute is effectively subsidising pollution.

A green tax shift is better than carbon trading because society is effectively renting out the right to pollute, rather than giving the rights away for free. It allows you to reduce other taxes to offset the increase in the price of petrol etc, rather than just having an increase in price with the extra money going to oil companies. It is also the more moral choice, because the right to clean air should rest first and foremost with the public, rather than the right to pollute resting with companies.

A Green Tax Shift is more flexible, as the taxes can be adjusted as is necessary or as more information about global warming becomes available. Overtaxing slightly will not harm the economy as it will just be an alternative form of revenue raising. Carbon trading may require governments to buy back emissions rights at hugely inflated prices (= profits for greenhouse emitters). Or, as is currently the case, the emissions rights may become worthless due to minor adjustments made by industry that have a big impact on effiency, or other changes that limit industrial activity in participating countries.

A Green Tax Shift does not require international agreements because it does not place a country at a competitive disadvantage.

Green Tax Shift:

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There are so many ways in which people can reduce greenhouse gas emissions. They can change spending habits and buy different types of products. They can buy the same type of product, but choose ones that have a lower carbon cost. They can switch off lights when they aren't using them. Industry can use electricty, heat etc more efficiently. They can completely change how things are made. They can fix leaks in the compressed air system. They can decentralise to reduce transport requirements. Buildings can be made far more energy efficient at little or no extra cost. Electricity production can change too. Carbon could be sequestered. Waste heat can be recaptured. Transmission efficiency can be improved. They can switch to alternative sources.

All these options. How could the government possibly know which is cheapest, and how could they possible mandate change effectively? They can't. It shouldn't be up to the government to figure that out. It should be up to the government to ensure people consider the full cost of their decisions, and they should let all the economic forces drive the most efficient changes.

You can bet that the cheapest changes wouldn't be more wind trubines and it won't be people switching their cars to gas, both of which are being heavily subsidised in Australia. There are far cheaper ways to reduce emissions.

the limitations of regulation

Read the statement of economic consensus: