pa395 green taxes and public finance in vermont intro aug. 31, 2004 gary flomenhoft, adjunct faculty...
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PA395 Green Taxes and Public Finance in VermontIntroAug. 31, 2004
Gary Flomenhoft, Adjunct Faculty MPABurlington, VT
Column A: Personal Consumption ExpendituresColumn B: Income DistributionColumn C: Personal Consumption Adjusted for Income InequalityColumn D: Va lue of Household LaborColumn E: Va lue of Volunteer WorkColumn F: Services of Household CapitalColumn G: Services Highways and StreetColumn H: Cost of CrimeColumn I: Cost of Family BreakdownColumn J: Loss of Leisure TimeColumn K: Cost of UnderemploymentColumn L: Cost of Consumer DurablesColumn M: Cost of CommutingColumn N: Cost of Household Pollution AbatementColumn O: Cost of Automobile AccidentsColumn P: Cost of Water PollutionColumn Q: Cost of Air PollutionColumn R: Cost of Noise PollutionColumn S: Loss of WetlandsColumn T: Loss of FarmlandColumn U: Depletion of Nonrenewable ResourcesColumn V: Long-Term Environmental DamageColumn W: Cost of Ozone DepletionColumn X: Loss of Forest CoverColumn Y: Net Capital InvestmentColumn Z: Net Foreign Lending and Borrowing
GPI by Column
“PERVERSE” SUBSIDIES
Perverse subsidies are adverse for the economy
as well as the environment.
$billions per year Agriculture 510 Fossil fuels/nuclear energy 300 Road transportation 780 Water 230 Fisheries 25 Forests 92 Total 1,950 By definition, these funds support unsustainable development.
Contrast the Rio budget for sustainable development, $600 billion per year.
PERVERSE SUBSIDIES: IMPACTS
They: * increase taxes.
* inflate governments' budgetary deficits.
* send false signals to investment markets.
* suppress innovation and technological change.
* foster inefficiency rather than productivity.
* drive up prices of e.g. food.
* benefit the rich over the poor.
* promote consumption rather than conservation of scarce resources.
U.S. SUBSIDIES FOR ROAD TRANSPORTATION ($ billions)
Oil and car industries 15 Road building and infrastructure 135 Free parking 150 Congestion 100 Accidents, injuries and deaths 110 Military safeguards 25 Environmental externalities (mainly pollution) 160 Total subsidies $695 billion (range $425-958 billion)
U.S. CAR CULTURE
Price now paid for a gallon of gasoline $1.50 Total paid costs $200 billion
Costs of tax funds for road building .22 Maintaining roads, highway patrols,
emergency teams and related services .69 Free parking .38 Road congestion .81 Accidents, injuries and deaths .47 Military safeguards .24 Pollution 1.34
Total per gallon 4.15 Total unpaid costs $550 billion
PERVERSE SUBSIDIESIN THE UNITED STATES
A typical American taxpayerfunds perverse subsidies by
at least $2000 a yearand then pays another $1000
for environmental restoration, or through increased
prices for goods and services.
US Oil subsidies vs. global PV sales
5.2
1.1
11.8
0
2
4
6
8
10
12
14
16
18
US oil subsidies Global PV sales
Billions of US $
WHAT SHALL WE DO? 1. Swap GNP for NNP, or an
Index of Net Sustainable Welfare, or a Genuine Progress Indicator.
2. Get the prices right, e.g. gasoline/petrol. 3. Phase out “perverse” subsidies. 4. Expand eco-technologies.