VT Green Tax Shift & Common Asset Fund
Dec. 7, 2004
UVM Green Tax course
Public Administration 395:
Melissa Bailey
Thomas A. Benoit Sr.
Amanda Dow Davis
John Demeter
Cheryl L. Diersch
Gary Flomenhoft, Instructor
Peter M. Freeman
Andrew Jope
John Mejia
Rachel Marie Weston
http://www.uvm.edu/~gflomenh/GRN-TAX-VT-PA395/
“There is nothing more difficult to carry
out, more doubtful of success, nor more
dangerous to handle, than to initiate a
new order of things. For those who would
institute change have enemies in all those
who profit by the old order, and they have
only lukewarm defenders in all those who
would profit by the new order.”
---Nicolo Machiavelli, 1490
WHAT ARE GREEN TAXES?
"PAY FOR WHAT YOU TAKE, NOT FOR
WHAT YOU MAKE"
"TAX WASTE, NOT WORK”
Tax Nature, NOT Labor or Capital
•Environmental protection
•Economic Efficiency
•Using market incentives
Survey-EU Green taxes
EU Types of Green taxes
NW GREEN TAX SHIFT
Inventory of NE GREEN TAXES
NE GREEN TAXES
NE GREEN TAXES
CURRENT VERMONT GREEN TAXES
Captive Insurance
Insurance
Telephone Company
Beverage Cigarette
Tobacco Products
Other general taxes
VT Taxes-2004
TOTAL WASTE
Other fees
Bank Franchise
TOTAL ENERGY
TOTAL AIR AND WATER
TOTAL CHEMICALS
Speculative Gains Tax
Telephone Property
Telecommunications
current use property
Corporate Income
land-NICU
Meals & Rooms
Sales & Use
Estate Tax
buildings-NICU
Personal Income
Property Transfer Tax
GREEN TAX PRINCIPLES
What is the goal of government?
What is the goal of taxation?
Can they be combined?
Excludable
Non-Excludable
Market Good:
Food, clothes, cars,
land, timber, fish once
captured, farmed fish,
regulated pollution
Open Access Regime:
(misnamed: Tragedy of the
commons)
Oceanic fisheries, timber
etc. from unprotected
forests, air pollution, waste
absorption capacity
Potential market good
Non-rival} (Tragedy of the “noncommons”)but inefficient:
patented information,
Pond, roads (congestible),
streetlights
Private beaches, private
Non-rival,
gardens, toll roads,
congestible zoos, movies
Pure Public Good:
climate stability, ozone
layer, clean air/water/land,
Biodiversity, information,
habitat, life support
functions, etc.
Rival}
Public beaches, gardens,
roads, etc.
Taxation + Provision of Public
Goods
Taxation Public Goods
Green Taxes
GREEN TAX PRINCIPLES
1.Internalize external costs
2.Behavioral Approach
3.Revenue Generating
EXTERNAL COSTS?
ECONOMY
POLLUTION
DEPLETION
LAND USE
(Not to mention social costs)
PRICES LIE
Vermont GPI study
20,000
18,000
Burlington
Chittenden
16,000
Vermont
US
$/capita
14,000
12,000
10,000
8,000
6,000
4,000
2,000
1950
1960
1970
1980
Year
1990
2000
GDP AND HAPPINESS
1. Cost Internalization
•Pigouvian theory (AC Pigou)
•external costs
•Polluter pays principle
•restoration costs
•Least cost abatement-
•cost required to abate pollution
2. Behavioral Approach
WHATEVER YOU TAX YOU GET LESS
OF
(WITH ONE EXCEPTION)
WHAT DO WE WANT LESS OF?
WHAT DO WE WANT MORE OF?
TAX ON BUILDINGS/JOBS
P
S1
CS
p1
PS
D
q1
Q
TAX ON BUILDINGS/JOBS
S2
P
tax S
1
CS
p2
p1
Deadweight
loss
PS
tax
D
q2
q1
Q
Inelastic demand-gasoline (few subs.)
P
S1
CS
p1
PS
D
q1
Q
Inelastic demand-gasoline
S2
P
S1
CS
p2
PS
p1
tax
tax
D
q2
q1
Q
Elastic demand-movie (many subs.)
P
S1
CS
p1
PS
D
q1
Q
Elastic demand-movie
S2
P
p2
p1
S1
CS
PS
D
tax
q2
q1
Q
TAX ON LAND - no production cost
P
S
“Buy land, they ain’t
making any more.”
-Will Rogers
P1
D
Q1
Q
TAX ON LAND - fixed amount
P
S
“Buy land, they ain’t
making any more.”
-Will Rogers
P*
P1
tax?
D
Q1
Q
TAX ON LAND - no reduction
S
P
“Buy land, they ain’t
making any more.”
-Will Rogers
P*
tax?
P1
tax
Ps
D
Q*
Q1
Q
Modern Economists
Right: “Land tax is the least bad tax”
---Milton Friedman
Green: “Taxation of value added by labor and
capital is certainly legitimate. But it is both more
legitimate and less necessary after we have, as much
as possible, captured natural resource rents for public
revenue.”
---Herman Daly
Left: “Usurious rent is the cause of worldwide
poverty”
---Joseph Stiglitz
3. Revenue Generating
Green tax increase How to spend the money?
Deficit reduction: none in VT
Dedicated revenues: ~$5 Million
Other tax relief: ~$500 Million
GREEN TAX CRITERIA
1. ECONOMIC EFFICIENCY
2. DISTRIBUTIVE EQUITY
3. ENVIRONMENTAL PROTECTION
4. EASE OF ADMINISTRATION
Vermont Budget for 2004
John Demeter
$3,574,308,641
or about
$3.574 Billion
Sources of Revenue:
•
•
•
•
Federal Funds:
Tax Dep’t Revenue
Property Value Taxes
Other Fees/Taxes
$1.083 B
$1.063 B
$741.6 M
$677 M
What does ‘Other’ include?
• Motor Vehicle Fees
• Certain Gas and Fuel Taxes
• Licensing and Permitting Fees by ANR,
Sec. State, judiciary, and others
Complexity
• Tax Department – 37 line items in
Revenue account reports, each with own
set of rules and regs, not including
property value tax.
• Fees – Hundreds, if not thousands,
administered and collected by various
agencies. No compilation list exists. 1/3
of updated fees are reviewed annually by
the JFO.
Complexity, continued
• Few reliable sources of information exist.
• Must master the Bureaucratic shuffle to
begin to assemble worthwhile info.
Goal of revenue analysis:
Q. How much revenue raised in VT?
A. $2.117 B dollars instate revenue
Starting point for green tax shift.
2004 Vermont Revenue
Beverage
Captive Insurance
Insurance
Cigarette
Tobacco Products
VT taxes-2004
Other general taxes
Other fees
Telephone Company
Bank Franchise
TOTAL ENERGY
Telephone Property
TOTAL AIR AND WATER
Telecommunications
TOTAL WASTE
Corporate Income
Meals & Rooms
Sales & Use
Estate Tax
Personal Income
TOTAL PROPERTY
2004 Vermont Revenue
Tobacco Products
Cigarette
Beverage
Captive Insurance
Other general taxes
Other fees
VT Taxes-2004
TOTAL ENERGY
Insurance
Telephone Property
Bank Franchise
Telephone Company
TOTAL AIR AND WATER
TOTAL WASTE
TOTAL CHEMICALS
Speculative Gains Tax
Telecommunications
Corporate Income
current use property
Meals & Rooms
land-NICU
Sales & Use
Estate Tax
buildings-NICU
Personal Income
Property Transfer Tax
2004 Vermont “Green” Revenue
Captive Insurance
Insurance
Telephone Company
Beverage Cigarette
Tobacco Products
Other general taxes
VT Taxes-2004
TOTAL WASTE
Other fees
Bank Franchise
TOTAL ENERGY
TOTAL AIR AND WATER
TOTAL CHEMICALS
Speculative Gains Tax
Telephone Property
Telecommunications
current use property
Corporate Income
land-NICU
Meals & Rooms
Sales & Use
Estate Tax
buildings-NICU
Personal Income
Property Transfer Tax
Energy Taxes
Andrew Jope
Rachel Weston
Peter Freeman
The Case for a VT Carbon Tax
Rationale
• Simplification
– Replace existing energy taxes with a single tax on
carbon content of fuels.
• Behavioral Change
– Encourage reduced consumption of fossil fuels and
reduced CO2 emissions.
• Revenue Leveraging
– Make use of revenues to purchase energy saving
efficiencies and stimulate growth.
Current Energy Taxes
Rate
‘04 Revenue
Gasoline Tax
$.19 / gal
71.9
Diesel Tax
$.16 / gal
18
Sales Tax on
Comm. Energy
Utilities Gross
Receipts
Fuel Gross
Receipts
TOTAL
5%* (with
exceptions)
.3-.5% of gross
oper. revenue
.5% on retail
sales
15
5.7
5.5
116.1
Carbon Tax: Pro/Con
• PRO
• Broad influenceconsumers, transport.
• Low transaction costs
• Ease of administration
• Produces recyclable
revenue
• CON
• Emissions reductions
not predictable
• Vulnerable pricing due
to inflation/ price
shocks
• Not targeted to reduce
all GHG’s.
• Regressive
Carbon Tax Proposal
• $100 per ton tax on carbon content of fuels.
• Applied at point where fuels enter Vermont
economy.
• Revenues recycled back to taxpayers
(individual and commercial).
• Comparable tax on nuclear and large hydro
(market competitiveness).
Revenue Estimates
Total
$100/ton + tax on Minus existing
hydro/nukes
energy taxes
364,500,000
248,400,000
Residential
112,400,000
76,600,000
Commercial
71,500,000
48,800,000
Industrial
53,000,000
36,100,000
127,500,000
86,900,000
Transportation
Price Effects on Fuels
2004 Estimate
Gasoline ($ per gallon)
.29 - .19 = .10 net increase
Electricity (cents / kWh)
.01 (less existing)
Natural gas (cents/ therm)
17.2 (less existing)
Fuel Oil ($ per gallon)
.34 (less existing)
Coal ($ per ton)
76 (less existing)
Energy Savings and CO2
Reductions
Energy Use (TBTU)
125.56
Energy Saved (TBTU)
4.98
GHG Emissions (CO2
equiv. tons)
9,702,000
GHG Emissions Reduced
(CO2 equiv. tons)
386,000
2004 Energy Tax Revenues
(Existing)
Vermont 2004 Energy Taxes
Electric
Fuel Gross
Energy Tax
Utilities Gross Estimated Revenue
Receipts Tax
1%
Receipts Tax 2%from Sales Tax on
2%
Commercial Energy
use
6%
Motor vehicle
Diesel Tax
registration fees
7%
21%
Total Motor Vehicle
Purchase and use
tax
33%
Total gasoline taxes
28%
• 2004 Total energy revenue: $259,269,147
Energy Tax Revenues (Including
Carbon Tax)
2004 revised energy taxes
Diesel Tax
0.3%
Motor vehicle
registration fees
10.6%
Total Motor
Vehicle
Purchase and
use tax
16.8%
Total gasoline
taxes
1.4%
carbon tax
42.0%
Nuclear and
large hydro tax
28.8%
• 2004 Revised Energy Revenue: $521,540,000
Energy Tax Revenues (Including
Carbon Tax)
Vermont 2004 Energy Taxes
$500,000,000
Nuclear and large hydro tax
$400,000,000
carbon tax
Motor vehicle registration fees
Total Motor Vehicle Purchase and use tax
$300,000,000
Total gasoline taxes
Diesel Tax
$200,000,000
Estimated Revenue from Sales Tax on Commercial
Energy use
Utilities Gross
Receipts Tax
Electric
Energy Tax
Fuel Gross
Receipts Tax
$100,000,000
$0
2004
2004 final
revision
Trading Carbon Offsets
• Emerging markets for emissions/ sequestration trading:
–
–
–
–
Kyoto Signatory nations
EU cap and trade system (2005)
Chicago Climate Exchange
Northeastern States cap and trade system (2005)
• Allows for trading CO2 emissions with carbon
sequestering “sinks.”
• “the biggest commodities market in the world.”
(Northwestern Univ. / CCX)
-R. Sandor
Carbon Trading Potential for VT
Agricultural/Forest Land
• States (NE,AK) have begun quantifying sequestration
potential of land.
• VT forests hold a carbon stock of 492.6 MMTC (1997).
• Carbon tax revenues can be used to quantify capacity/pool
land holdings/define compliance mechanisms for trading.
• US farmers can sequester 200 MMTC annually / add $4-6
billion gross income (10% increase in average net farm
income).
Shifting Transportation
• With a rise in the price motor fuel, drivers
may seek other options.
High Speed Rail
• Vermont has been designated a HSR corridor as
part of the Boston-Montreal Corridor.
• Infrastructure in place
Funding for HSR
• Estimated cost ~ $300 million in capital investments.
• Decrease new road and highway construction and reallocate for HSR
Reallocation of Funding for HSR
$120,000,000
$100,000,000
$80,000,000
public transport
$60,000,000
Roadway &
Highway Bridges
$40,000,000
$20,000,000
$0
2002 2005 2008 2013
Alternative Fuel Vehicles (AFVs)
To make Vermont a leader in clean fuel
vehicles, need:
1. Initiative
2. Money
3. Effective approach
Initiative
• Vermont has not been subjected to federal
regulations due to its small size and clean air
• But has taken voluntary measures
– Clean cities coalition (VCCC)
However, more must be done
Money
• VCCC has been severely under funded
– $40,000 operating budget in 2004
• With no money, program is largely symbolic
• Large funding increases necessary to achieve
program’s goals
Carbon Tax to the rescue
Effective Approach
•
•
•
•
Automobile consumer market stubborn
Gas prices not enough to induce change
AFVs must be viewed as desirable product
Since market for AFVs is currently weak,
must get vehicles on the road through other
means
Fleet Conversions
Fleet Conversions
• Municipal and Private
• Target “niche markets” for cost effectiveness
– Affects most polluting vehicles
– Minimizes cost of, and maximizes use of new
infrastructure development
– Maximizes technological upgrading
Many markets in Vermont, especially
Burlington
Niche Markets in Burlington
1.
2.
3.
4.
5.
Public busses
Vehicle lease programs for commuters
University of Vermont Campus
Taxi services
Burlington International Airport
Vermont Property Related Taxes
Melissa Bailey
Vermont Property Taxes:
Tax
Rate
2004 Revenue
Property Transfer
Tax
.5%- 1.25%
$33,951,657
Speculative Gains
Tax
5-80%
$4,288,132
Current Use Penalty 10-20%
Tax
$404,155
Property Tax (State
Portion)
$741,600,000
avg 1.52%
Vermont Property Taxes
eee property tax
(PROP68)
0%
Current Use Penalty
Tax
0%
Speculative Gains
Tax 1%
current use property
1%
Property Transfer
Tax
4%
land
29%
buildings
65%
Property Taxes
• Are actually 2 taxes: on land and on
improvements.
• Provide a steady and reliable source of
income.
• Account for 1/3 of VT’s state revenue.
• Can influence development patterns.
Land Value Taxation:
• Shifts property tax liability from
improvements to land.
• Articulated by political economist Henry
George (1879).
• Equity, Efficiency, Environmental Protection.
Effects of Land Value Taxation:
• Removes “market disincentive”
for making improvements.
• Reduces land speculation.
• Reduces sprawl, encourages
compact development.
• Society benefits from societal
value of land.
Applications of Land Value Taxation:
• 700 cities worldwide use a graded
property tax system
• Denmark (1844)
• Canada (1903)
• South Africa (1914)
• Pennsylvania (1913)
Land Value Taxation in Vermont?
• Currently 2/3 of VT Property Tax
Revenue comes from tax on the
value of buildings.
• Buildings assessed at $33.2 Billion
and Land assessed at $14.9 Billion.
• LVT rate of 5% would generate the
current level of revenue for the state.
Recommendations:
• Apply LVT only in “growth centers.”
• Reverse current ratio to generate 2/3 of
state property tax revenue from taxes
on land.
• Work with established growth
boundaries being developed by the
Vermont Smart Growth Collaborative.
• Revenue Neutral.
Proposed Property Tax Revenue
Speculative Gains Tax
1%
Current Use Penalty Tax
0%
eee property tax (PROP68)
0%
current use property
1%
Property Transfer Tax
4%
buildings-NICU
29%
land-NICU
65%
2004 REVISED
VT Property taxes
WASTE TAXES-Thomas A. Benoit Sr.
Past Taxes and Projected Changes
Solid Waste
• Operators of Solid Waste facilities and Transfer facilities
pay a $6 per ton tipping fee.
• Vermonters generate approximately 3.4 pounds per capita
every day
• Most Vermonters pay for waste disposal on a per capita or
flat fee rate.
• Vermont has two permitted lined landfills that will reach
capacity in about seven years.
• Vermont has a $.05 deposit on glass, metal, paper or
plastic containers of beer, malt beverages, mineral waters,
mixed wine drinks, soda water, and carbonated soft drinks.
Hazardous Waste
• A fee of one cent per gallon is assessed on all motor vehicle
fuels sold in the state for the purpose of providing cleanup
funds for leaking petroleum storage tanks.
• A tax is assessed on hazardous waste in Vermont when the
waste is shipped, or when facilities recycle, treat, store, or
dispose of hazardous waste. The tax is based on the quantity of
the hazardous waste and its ultimate destination (e.g., whether it
is destined for recycling, treatment, or land-disposal.
• The standard fee for Underground storage tanks (USTs)is
$200 per tank, but some gasoline outlets and municipalities that
use smaller amounts of motor vehicle fuel pay $100 per tank.
• Petroleum cleanup fees and tank assessment fees are
deposited into the Petroleum Cleanup Fund.
TOTAL WASTE TAXES 2003
Annual Tank
assessment
fees
5%
Petroleum
Clean-up Fee
52%
Solid Waste
Tax
40%
Hazardous
Waste Tax
3%
2004 Current Revenue for Total Waste:
$5,901,672
GREEN TAX RECOMMENDATIONS
Solid Waste
• Increase the solid waste tax from $6 per ton to $12 per ton
($3,243,041 to $5,188,866 assuming a 20% reduction in
waste due to the increase).
•Institute a mandatory recycling and enforcement program.
• Institute statewide mandatory Pay As You Throw (PAYT)
programs with a .13/pound PAYT fee (approx $260/ton or
$144,135,156).
• Increase funding for market development for recycled
materials.
Bottle Bill
• Keep the bottle deposit at 5 cents and add all beverage
containers to the bottle bill.
GREEN TAX RECOMMENDATIONS
Hazardous Waste
• Increase the petroleum clean-up fee from one cent per
gallon to two cents per gallon ($2,385,227 to $4,774,454).
• Increase compliance and inspection visits for tank owner
($300,000).
• Increase education and outreach to tank owners and the
general public ($200,000).
Estimated Waste-revenues
Petroleum Cleanup Fee
Annual Tank
Hazardous 3%
assessment fees
Waste Tax
0%
0%
Solid Waste Tax
97%
2004 Revised Revenue for Total Waste:
$155,005,344
INTENDED OUTCOMES
Solid Waste
• Decrease our current rates of fill for the two permitted lined
landfills.
• Mandatory recycling and enforcement will level the playing
field for all those involved. Recycling will take place at all
levels (residential, business and institution).
• PAYT will create personnel incentives to reduce waste
generation and increase recycling.
• Markets development will make waste reduction a very
appealing option.
Bottle Bill
• Increase recycling and generate more materials for the
recycling markets.
INTENDED OUTCOMES
Hazardous Waste
• Regulated tanks will be operated and maintained properly
due to increased inspections, which will result in fewer
leaking tanks.
• Current sites will have more resources to help eliminate
environmental pollution.
• Tank owners and the general public will be more aware of
improper maintenance and contamination.
Pesticides, Fertilizers, Air & Water Pollution
John Mejia
Amanda D. Davis
Cheryl Diersch
Health:
Our Most Important Asset
Pesticides, Fertilizers, Air & Water Pollution
Man can live about forty days
without food, about three days
without water, about eight minutes
without air, but only for one second
without hope.
Anonymous
When the well’s dry, we know the
worth of water.
Ben Franklin
Treat the earth well, It was not given
to you by your parents, It was loaned
to you by your children.
Native American Proverb
Health:
Our Most Important Asset
The Problem
• Discharges into Lakes, Rivers, etc.
• Harmful Air Emissions
• Consumption of Hazardous Household Products
• Family Farms Struggling Due to High Costs of Pesticides and
Fertilizers
Where will VT be in 20 years if we ignore the problem?
California Model:
DETERIORATED HEALTH AND
ENVIRONMENT
•
•
•
•
•
Increased Cancer Rates
Increased Infant Mortality
Toxic Water
SMOG
Loss of Family Farms
Where could VT be in 20 years if we address the problem?
Slovenia Model:
HEALTHIER FAMILIES & CLEANER
ENVIRONMENT
•Decreased Infant Mortality
•Movement towards Organic
•Anti-GMO
•Population - 2 million
•Vibrant Tourist Industry
•Recently Seceded
Strategies for Behavioral Change
• Education – Raise Public Awareness
• Reduce Consumption – Price Adjustments
• Reuse – “Gray Water” Irrigation
• Innovation – Sustainable & Eco-Friendly Practices
Air Pollution
The Problem
1. Most air pollution is from
non-point sources.
2. Due to the rural nature of our
state, 50% of energy
expenditures in VT are for
transportation and this
accounts for most of the air
pollution in the state.
3. This transportation related
pollution has been dealt with
by the Carbon Tax explained
earlier.
Air Pollution
• Air Toxics Program
• Title V
Title V - Construction
Basic Fee Schedule
Type
Amount
New Rate
Permit Application
Major Stationary
$11,500
$15,000
Non-Major Stationary
$750
$1,000
Indirect Source
$4,000
$5,000
Clerical
$100
$100
Technical
$500
$500
Amount
New Rate
$1,460
$2,000
Screening Model
$600
$600
Refined Model
$1,170
$2,000
Observe and Review
Emissions Testing
$1,750
$2,000
Audit Performance of
Ambient Air Monitoring
$1,750
$2,000
Implement Public
Comment Requirement
$500
$500
Minor Amendment
Supplemental Fee
Schedule for NonMajor Stationary
Sources
Engineering Review
Air Quality Impact
Analysis
Type
Title V - Operating
Emitters have to pay for permission
to release harmful chemicals into the
atmosphere. They pay fees to the
state to cover the cost of monitoring
their businesses and then get charged
by the amount of pollution emitted.
Usually by the pound or gallon of
chemical.
Air Toxics - Definition
• "Air toxics" refers to 188 hazardous air pollutants (HAPs) listed in the Clean
Air Act (CAA) of 1990.
• HAPs include industrial chemicals, solvents, metals, pesticides, and
combustion by-products.
• Top 10 air toxics exceed health-based standards in Vermont.
1.
Acetaldehyde
2.
Formaldehyde
3.
Benzene
4.
Methylene Chloride
5.
1,3-Butadiene
6.
Tetrachloroethylene
7.
Carbon Tetrachloride
8.
Mercury
9.
Chloroform
10. Styrene
Air Toxics
• Mobile Sources: On and off road vehicles and aircraft.
• Area Sources: Burn barrels, gasoline filling stations, woodstoves,
paint stripper, surface coatings, drycleaners, industrial boilers, etc.
(small stationary sources)
• Point Sources: Manufacturing operations (large stationary sources).
Air Toxics – Management
Entities producing more than 5 tons of
“criteria” air pollutants must register
with the state. These include
approximately 218 entities including:
•
UVM
•
Cargill
•
OMYA
•
Burlington Electric
•
Middlebury College
These 218 Point Sources released 11,086 tons of toxics into the
air in Vermont during 2000.
Air Toxics Revenues
• In 2003 VT raised $153,576 in revenues from toxics.
Basic Fee Schedule
Amount
New Rate
For facilities with
emissions greater than
5 tons but less than 10.
$ 0.016 per pound of
emissions of SO2,
PM, 00, NOR, or
Hydrocarbons
$250 plus
$0.032 per pound
For facilities with
emissions greater than
10 tons.
$840 plus
$ 0.016 per pound
$1,680
$ 0.032 per pound
Hazardous Contaminant
Surcharge
Excludes emission from the
combustion of fuels except for
“solid waste” fuel.
Type 1: $ 0.008 per pound emitted
Type 2: $ 0.084 per pound emitted
Type 3: $ 0.840 per pound emitted
Type 4: $ 8.40 per pound emitted
Excludes emission from the
combustion of fuels except for
“solid waste” fuel.
Type 1: $ 0.08 per pound emitted
Type 2: $ 0.84 per pound emitted
Type 3: $ 8.40 per pound emitted
Type 4: $ 84.00 per pound emitted
Coal: $0.43perton
Wood: $ 0.103 per ton
#6 Fuel Oil: $ 0.0005 per gallon
#4 Fuel Oil: $ 0.0004 per gallon
#2 Fuel Oil: $ 0.0002 per gallon
LPG: $ 0.0002 per gallon
Natural_Gas: $0.87 per million ft3
Coal: $0.86perton
Wood: $ 0.206 per ton
#6 Fuel Oil: $ 0.001 per gallon
#4 Fuel Oil: $ 0.0008 per gallon
#2 Fuel Oil: $ 0.0004 per gallon
LPG: $ 0.0004 per gallon
Natural_Gas: $1.74 per million ft3
Fee assessed based on emissions
with regard to public health.
Please consult the Air Division for
type definitions.
Hazardous Contaminant
Surcharge on the
amount of fuel burned
annually.
AIR EMISSION FEES
Air
$310,000
$260,000
$210,000
$160,000
$110,000
$60,000
$10,000
Toxic air em issions by the pound by chem ical
Title V-EPA air em issions perm it-facilities
Current Water Taxes
• Water Discharge Fee
– Application for discharge permit is $100
– Application review fee ranges from $50 to
$30,000
• Stormwater Fee
– Administrative fee of $100
– Application review fee
• $300 per acre of impervious surface in a Class B
watershed
• $1170 per acre of impervious surface in a Class A
watershed
– Annual operating fee
• $50 per acre of impervious surface in a Class B
watershed
• $235 per acre of impervious surface in a Class A
watershed
Price Changes
Current
• Water Discharge Fee
• $100 permit
• $50-$30,000 review fee
• Stormwater Fee
• $100 administrative operating fee
• $300-$1170 application review fee
• $50-$235 annual operating fee
Revised
• Water Discharge Fee
• $300 permit
• $150-$90,000 review fee
• Stormwater Fee
• $300 administrative operating fee
• $900-$3510 application review fee
• $150-$705 annual operating fee
Water Consumption Fee: Part I
•
First 100 gallons of water used per household will be free (as
it already is), but every gallon thereafter will be subject to the 1
cent per gallon fee.
•
Currently an average household consumes about 200 gallons
of water
per day.
Water Consumption Fee: Part II
 Ease of Administration
– Meters already in place on houses.
– Meters can easily be placed on wells.
 Equity
– Because the first 100 gallons will be free of charge, only excessive use of
water will be taxed.
 Economy
– A Water Consumption Tax will generate an enormous amount of money
which can displace other taxes.
 Environment
– Taxation on the consumption of water promotes efficiency and
conservative use. It also encourages recycling, reuse, and innovation.
WATER RELATED FEES
Water
$100,000,000
$10,000,000
$1,000,000
$100,000
$10,000
Water discharge fees
storm w ater fee
Water consum ption fee
Pesticide & Fertilizer Revenues
Product registration fee
Current
Proposed
$75.00
$41,000
$300.00
Dealer’s License &
Application Fees for Pesticides
Fertilizer product registration max.
fees @ $15.00/nutrient
$105.00
Fertilizer tonnage tax@
$.25/ton
Total
$82,000
@ $30.00/nutrient,
max. $210.00
with a min. @ $.50/ton with a
of $50.00
min. of $100.00
$932,000
$3,203,000
Sales Tax Exemption for Agriculture
6.0% Sales Tax Exemption for Agricultural
Use of Pesticides and Fertilizers
Current Fair Tax
Revenue Proposal
Farmers,
Nurseries,
Orchards,
etc
$0.00
$1,100,000.00
Green Tax
Proposal
$0.00
Chemicals
$3,010,000
Total
Current -$932,000
Proposed - $3,203,000
$2,510,000
$2,010,000
$1,510,000
$1,010,000
$510,000
$10,000
Registration annual fee for new
pesticide products, household
products
Commercial pesticide dealer's
license & applicator licenses
fees
Fertilizers product registration
fee
Fertilizers tonnage tax
Benefits of Our Proposed Change
•
•
•
•
•
•
Healthier Vermonters
Pure Water
Fresh Air
Increased Tourism
Family Farms Flourish In Vermont!
The GREEN Mountain State Prevails!
Resources
•
•
•
•
•
•
http://www.chem.unep.ch/pops/POPs_Inc/proceedings/abu-dhabi/KOVACS.html
http://www.ppionline.org/ppi_ci.cfm?knlgAreaID=108&subsecid=900003&contentid=253035
http://cpr.radicaldesigns.org/article.php?id=210
http://www.anr.state.vt.us/air/Planning/docs/rptFacEmissionsTotal-2000.rtf
http://www.vtwaterquality.org
http://www.vpirg.org
•
•
•
•
•
•
http://www.pesticideinfo.org/Docs/ref_general2.html#ChemName
http://www.foodfirst.org/who/
http://www.serconline.org/pesticides/fact.html
http://www.serconline.org/pesticides/index.html
http://www.foodfirst.org/pubs/backgrdrs/2004/s04v10n3.html
http://www.pesticideinfo.org/Detail_Country.jsp?Country=Sweden#ChemReg
Offsets for a Green Tax Shift
John Demeter
Additional revenue from Green Taxes
$500Million– where should it go?
•
•
•
•
•
Offset individual income tax?
Offset Corporate/business income tax?
Offset Telecommunications tax?
Other Recommendations?
Offset Fed payroll tax?
Individual Income Tax?
• Over $400 M, 40% Tax Dep’t receipts over
last several years
• Can eliminate tax on large percentage of
filers for relatively small expenditure
Individual Income – Examples
To eliminate income tax on x %, who earn…would cost…
• 52% of filers <$30K Income $19.6 M
• 71% of filers <$50K Income $72.2 M
• 100% of filers all income brackets
– $380M - $420M, depending on year
Drawbacks of Income tax Offset
• State Income tax is progressive enough that
lowest income filers have little or no
liability.
• Offsetting Income tax would not help
compensate for higher fuel costs.
Corporate/Business Income Tax?
• Could potentially be eliminated
• Left alone for now
– Businesses derive benefits from offsetting
FICA
– Law of unintended consequences
– Current work being done to change corporate
taxation, requiring Unitary Combined reporting
to crack down on income-shifting
Sales and Use Tax?
• Considered ‘green’, as it taxes throughput
and waste.
• Left alone for now.
• Must be reviewed and revised to tax
environmentally damaging products more
heavily than benign ones.
• Review exemptions, leave only those on
necessities used by all people.
Federal Payroll Taxes
FICA – Federal Insurance Contributions Act
• Part 1 – Social Security/OASDI
– (Old Age, Survivors, Disability Insurance)
– 12.4% of all wages paid up to $87,900. Ceiling
increases to $90,000 in 2005.
– Half paid by employer, half by employee,
unless self –employed.
FICA Taxes, cont’d
• Part 2 – Medicare
– 2.9% on all wages – no ceiling
– Half paid by employer, half by employee, unless self employed.
•
Total of 15.3% of wages paid to FICA
- 7.65% each by employer and employee
- (over 90% of Vermonters are unaffected by ceiling)
Why FICA?
• Better direct offset than income taxes.
• Easy to measure due to federal reporting
requirements.
• Can reimburse based on wages and taxes
paid, starting at the bottom of the income
scale.
• Better for business: 7.5% tax reduction
Examples
Income
employee
FICA
employee
$10-$15K
VT
income
tax
0
FICA
Selfemployer employed
$956
$956
$1912
$15-$20K
$79
$1340
$1340
2680
$25-$30
$459
$2104
$2104
$4,207
$30-$35K
$633
$2486
$2486
$4972
Economic Benefits-FICA offset
• Returns income to those most likely to
spend it, boosting local economy.
• Incentive for employment.
• Aids businesses as well as workers.
• If its favorable to employ or be employed
here, that’s a Business-Friendly
environment for Vermont!
Shifts tax from a ‘good’ to a ‘bad’!
• Revenue collected based on carbon
emissions and/or water usage, which
individuals and businesses can work to
control. There is a financial incentive to
make responsible decisions.
• Damaging impacts of payroll taxes are
offset, boosting Vermont economy.
Design/Administration
Captive Insurance
Insurance
Bank Franchise
Telephone Company
Telephone Property
Telecommunications
Cigarette
Tobacco ProductsTOTAL ENERGY
Beverage
Other general taxes
Other fees
TOTAL WASTE
TOTAL AIR AND WATER
Speculative Gains Tax
current use property
Corporate Income
land-NICU
Meals & Rooms
Sales & Use
Estate Tax
buildings-NICU
Personal Income
Property Transfer Tax
$2.6B revenue
2004 VT Taxes+FPT
Fed Payroll tax
Design/Administration
Captive Insurance
Insurance
Bank Franchise
Telephone Company
Beverage
Cigarette
Tobacco Products
Other general taxes
Other fees
Telephone Property
TOTAL ENERGY
2004 VT Taxes+FPT
TOTAL WASTE
TOTAL AIR AND WATER
Speculative Gains Tax
Telecommunications
current use property
Corporate Income
land-NICU
Meals & Rooms
Sales & Use
Estate Tax
buildings-NICU
Personal Income
Property Transfer Tax
Fed Payroll tax
$2.6B revenue
Design/Administration
Captive Insurance
Insurance
Beverage
Cigarette
Tobacco Products
Bank Franchise
Telephone Company
Other general taxes
VT Taxes+FPT
2004 REVISED
TOTAL ENERGY
Other fees
Telephone Property
Telecommunications
Corporate Income
TOTAL AIR AND WATER
Meals & Rooms
Sales & Use
TOTAL WASTE
Estate Tax
TOTAL CHEMICALS
Speculative Gains Tax
Personal Income
current use property
land-NICU
Property Transfer Tax
buildings-NICU
$2.6B revenue
100% Green TAX shift-2004
2004-100% GREEN
Carbon $300/ton
Land
9.6%
Waste
$2/bag
1c/gal
>100gals
Chem $300 on
product pesticides
fee
TOTAL ENERGY
36.0%
Water
$2.6B revenue
land
54.5%
TOTAL AIR AND
WATER
3.5%
TOTAL WASTE
TOTAL CHEMICALS
5.9%
0.1%
Conclusions
• Can shift to tax resources and waste without
hurting and perhaps helping the economy.
• Can eventually simplify taxation and
revenue generation enormously by shifting
to a few broad based green taxes.
• Like anything else, all that’s missing is the
political will.
VT COMMON ASSETS
PERMANENT FUND
Dec. 7, 2004
G. Flomenhoft, Adjunct Faculty UVM MPA program
Research Associate, Gund Institute
COMMON ASSETS-NATURE
COMMON ASSETS-SOCIAL
ASSAULT ON THE COMMONS
Common Assets Permanent Fund
Thomas Paine, Agrarian Justice 1797
“Men did not make the earth...it is
the value of the improvements only, and
not the earth itself, that is individual
property...Every proprietor owes to the
community a ground rent for the land
which he holds.;...from this ground
rent...I...propose to create a national fund,
out of which there shall be paid to every
person...a sum.”
Alaska Model: Alaska Permanent Fund
(Share of the commonwealth)
Alaska Model: Alaska Permanent Fund
US Sky-Trust-CAP/TRADE PERMITS
Sky-trust
Rent
Loop
Sky-Trust
Sky-Trust
VT ASSETS-Natural
VT MINERALS-2003
Gemstones
Sand and gravel,
construction
Stone:
Crushed
Dimension
Talc, crude
Total
Rent 10%
$1,000
$21,200,000
$22,800,000
$29,000,000
Not released
$73,000,000
$7,300,000
“The meek shall inherit the earth, except for the mineral
rights.”
-J. Paul Getty
VT FORESTS
FORESTS 791,035 $39,551,750
(cordsx $50/
x 10%=
2002)
Cord =
Public
Forests
(2004)
$622,371
x10% =
$3,955,175
$62,237
VT WATER-2004
WATER
1C/GAL>100 GALS
$87,831,410
VT LAND-2004
VT LAND VALUE
RENT 1%
$14,928,311,688
$149,283,117
VT ASSETS-Social
VT Trust-US AIRWAVES
VT Trust-US AIRWAVES
VT Trust-US AIRWAVES
“They used to rob trains in the Old West.
Now we rob spectrum.”
Senator John McCain,
Chairman, Senate Commerce Committee
VT Trust-US AIRWAVES
TOTAL US SPECTRUM VALUE
US population
VT population
ratio
VT Value
10% RATE
ANNUAL RENTAL VALUE
$771,000,000,000
294,712,028
619,107
0.21%
$1,619,653,939
10%
$161,965,394
International Exchange
Goods and
$30 Trillion/yr
Services
Buying and selling $1.5-2 Trillion/day
of paper
=$500-700T/year
95% speculation in paper!
VT TRUST-US financial Speculation
Current Trading
(Annual Rates)
Volume AfterTax
Stocks
$11 trillion
Government Bonds $41.6 trillion
Corporate Bonds $22.1 trillion
Futures Contracts $100 trillion
Currency
$200 trillion
(worldwide)
Swaps
$22 trillion
Options
Not available
Total US Revenue
Vermont Revenue
Projected
Tax Rate Revenue
Volume (both sides)
$7.3 trillion
0.5%
$36.5 billion
$27.7 trillion
0.1%
$27.7 billion
$14.7 trillion
0.1%
$14.7 billion
$66.7 trillion
0.02%
$13.3 billion
$133.3 trillion
0.1%
$33.3 billion
(U.S. share = 25%)
$14.7 trillion
0.02%
$2.9 billion
NA
0.01%
NA
(.25% RATE)
$128.4 billion
x .21%
$268,891,964
Source:
Taxing Financial Speculation: Shifting the Tax Burden From Wages to Wagers
by Dean Baker. February 2000. Ctre for Economic & Policy Research
WHO CREATES MONEY?
(SEIGNORAGE)
GOVT
$600 BILLION 7%
(CURRENCY)
BANKS
(LOANS)
$8 TRILLION 93%
TOTAL
$8.6
TRILLION
100%
FRACTIONAL RESERVE ~3-5%
How the Federal reserve system creates a private
banking monopoly cartel!
PRIVATE BANKING
SYSTEM
LOANS
$20,000
$20,000
ASSETS
PLUS INTEREST!
FED RESERVE BANK
$1000
(5% OF $20,000
“on reserve”)
INTEREST
$1000 DEPOSIT
VT MONEY CREATION
VT BANKS
(LOANS)
$3,574,450,000
1% RATE
$35,744,500
VT INTERNET ACCESS
Created by Public financing through DARPA.
Share of access, not commerce:
WEB SERVERS
AND EMAIL
ACCOUNTS?
???????????????
VT Common Assets Permanent Fund
VT Common Assets TOTAL
MINERALS-10%
PUBLIC FORESTS
WATER -1c/gallon)
$7,300,000
$62,237
$87,831,410
LAND-1%
$149,283,117
SPECTRUM-10%
$161,965,394
SPECULATION-.25%
$268,891,964
MONEY-1%
$35,744,500
INTERNET ?
???????????
TOTAL
Interest rate 5%?
Dividend 1st yr
$711,078,622
$35,553,931
$57
COMMON ASSET DIVIDENDS