PA395 Green Taxes and Public
Finance in Vermont
Intro
Aug. 31, 2004
Gary Flomenhoft, Adjunct Faculty MPA
Burlington, VT
GPI by Column
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A: Personal Consumption Expenditures
B: Income Distribution
C: Personal Consumption Adjusted for Income Inequality
D: Value of Household Labor
E: Value of Volunt eer Work
F: Servic es of Household Capital
G: Services High ways and Street
H: Cost of Crime
I: Cost of Family Breakdown
J: Loss of Leisure Time
K: Cost of Underemployment
L: Cost of Consumer Durables
M: Cost of Commuting
N: Cost of Household Pollution Abatement
O: Cost of Automobile Accidents
P: Cost of Water Pollution
Q: Cost of Air Pollution
R: Cost of Noise Pollution
S: Loss of Wetlands
T: Loss of Farmland
U: Depletion of Nonrenewable Resources
V: Long-Term Environmental Damage
W: Cost of Ozone Depletion
X: Loss of Forest Cover
Y: Net Capital Inv estment
Z: Net Foreign Lending and Borrowing
“PERVERSE” SUBSIDIES
Perverse subsidies are adverse for the economy
as well as the environment.
Agriculture
Fossil fuels/nuclear energy
Road transportation
Water
Fisheries
Forests
Total
$billions per year
510
300
780
230
25
92
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
Environmental externalities (mainly pollution)
25
160
Total subsidies $695 billion (range $425-958 billion)
U.S. CAR CULTURE
Price now paid for a gallon of gasoline
Total paid costs
Costs of tax funds for road building
Maintaining roads, highway patrols,
emergency teams and related services
Free parking
Road congestion
Accidents, injuries and deaths
Military safeguards
Pollution
Total per gallon
Total unpaid costs
$1.50
$200 billion
.22
.69
.38
.81
.47
.24
1.34
4.15
$550 billion
PERVERSE SUBSIDIES
IN THE UNITED STATES
A typical American taxpayer
funds perverse subsidies by
at least $2000 a year
and then pays another $1000
for environmental restoration,
or through increased
prices for goods and services.
Oil Subsidies
US Oil subsidies vs. global PV sales
18
16
Billions of US $
14
12
11.8
10
8
6
4
2
5.2
1.1
0
US oil subsidies
Global PV sales
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.
EU Green taxes
EU Types of Green taxes
GREEN TAX SHIFT
NW revenue
GREEN TAX
SHIFT
NE GREEN TAXES
NE GREEN TAXES
VT GREEN TAXES
Readings