Picking up the tab.

• Author: Brown, Lester R.
• Position: Economic Observer - Taxes and the environment

EACH YEAR, THE WORLD'S taxpayers provide an estimated $700,000,000,000 of subsidies for environmentally destructive activities, such as fossil fuel burning, overpumping aquifers, clearcutting forests, and overfishing. An Earth Council study, "Subsidizing Unsustainable Development," observes that "there is something unbelievable about the world spending hundreds of billions of dollars annually to subsidize its own destruction."

Iran provides a classic example of extreme subsidies when it prices oil for internal use at one-tenth the world price, strongly encouraging car ownership and gas consumption. The World Bank reports that, if this $3,600,000,000 annual subsidy was phased out, it would reduce Iran's carbon emissions by 49% as well as strengthen its economy by freeing up public revenues for investment. Iran is not alone. The World Bank relates that removing energy subsidies would reduce carbon emissions in Venezuela by 26%; Russia, 17%; India, 14%; and Indonesia, 11%. Some nations are eliminating or reducing these climate-disrupting subsidies. Belgium, France, and Japan have phased out all subsidies for coal. Germany reduced its coal subsidy from $5,400,000,000 in 1989 to $2,800,000,000 in 2002, thus lowering use by 46%. It plans to phase out this support entirely by 2010. China, meanwhile, has imposed a tax on high-sulfur coals.

While some leading industrial countries have been reducing subsidies, the U.S. has been increasing its support for the fossil fuel and nuclear industries. A Green Scissors report, a study supported by a coalition of environmental groups, calculated that, from 1993-2002, subsidies for the energy industry totaled $33,000,000,000. Of that, the oil and gas industry received $26,000,000,000; nuclear, $4,000,000,000; and coal, $3,000,000,000. At a time when there is a need to conserve oil resources, U.S. taxpayers are subsidizing their depletion.

Subsidies are not inherently bad. Many technologies and industries were born of government subsidies. Jet aircraft developed when military research and development expenditures led to modem commercial airliners. The Internet was the result of publicly funded links among computers in government laboratories and research institutes. Indeed, the combination of Federal and state tax deductions in California gave birth to the modem wind power industry. However, there is an urgent need for subsidy shifting. Eliminating environmentally destructive subsidies reduces the burden on...