Green tax primer.

• Author: de Jong, Frank
• Position: Economics Reconsidered

Sustainabity (adopting consumption levels that do not undermine the viability of future generations or other species) is the objective of the green movement and its electoral wing, the Green Party. The responsibility for creating the necessary framework to effect the required re-thinking of present lifestyles and technological choices falls to the government. Green Parties seek to become government in order to oversee this process.

The most effective route to sustainability is by employing the tools in the green economics toolbox. There are two types of green economics: subsidy-driven green economics and market-driven green economics. Green Parties gravitate to market economics since it requires less government expense and intervention, and is more politically palatable.

The market was originally theorized by Adam Smith to internalize all costs to ensure fairness and efficiency. Subsequent factors, however, like resource pollution, resource exhaustion, and sprawl have not been duly internalized, thus reducing the effectiveness of the market. This has unfortunately resulted in the market externalizing most ecological costs onto others, especially the poor, future generations, and other species. Greens would modernize Adam Smith by introducing the invisible "green" hand to make markets serve modern needs and realities.

Government should not participate in the market, only regulate it. For example, government should not build wind turbines, but rather, eliminate hidden dirty electricity subsidies through full cost pricing so that businesses and cooperatives will respond to market indicators by building turbines without subsidies. The same goes for transit, organic agriculture, affordable housing, energy conservation, ending sprawl, etc. When the market reflects true costs, government subsidies and regulation are no longer needed.

Greens call for ecological fiscal reform and revenue-neutral green tax shifting so that businesses that adopt green production processes will increase their profits while businesses that stay gray will be taxed more heavily. Businesses should not be taxed for hiring people or for making a reasonable profit but instead should pay levies and fees for squandering resources, using land inefficiently and polluting the planet. People should not be taxed for holding down a job, but should pay for the amount of land, energy and resources used. Businesses and shoppers usually follow the path of least tax resistance and should...