Taxation for Environmental Protection: A Multinational Legal Study.

• Author: Chase, Adam

1. Introduction

   In anticipation of the Earth Summit in Rio de Janeiro there were hopes that the European Community's carbon emissions tax initiative,,would gain considerable endorsement from the international conferees.(1) Although those hopes were not realized,(2) the proposal was well-received and the delegates were able to advance the concept of an international tax on emissions through the process of preparing and publicizing the initiative.(3) While international policymaker, are recognizing for the first time the idea of using globally scaled taxes as a potential mechanism to protect, the earth's environment, many countries have already successfully implemented the use of taxes to combat environmental degradation at the domestic level. In Taxation for Environmental, Protection: A Multinational Legal Study,(4) the authors examine the specific ways in which France, Germany, Sweden, the United Kingdom, and the United States have used and are developing tax laws to help alleviate environmental degradation. The book explores various fiscal measures that the selected industrialized nations have adopted or proposed in their attempts to harmonize tax and environmental policies. The ultimate purpose of these efforts has been to synthesize nonlegal fiscal strategies that reach beyond the limits of direct regulation and legal sanction to protect the environment.

   Taxation for Environmental Protection brings together, for the first time, an international study of fiscal measures for environmental protection. The hook draws on the expertise of Sanford Gaines and Richard Westin, the book's co-editors and co-authors of the chapter focussing on the United States; Robert Hertzog,(5) author of the chapter addressing France; Friedrich Von Zezschwitz,(6) author of the chapter on Germany's fiscal and environmental strategies; Asbjorn Eriksson,(7) author of the chapter discussing Sweden's efforts to combine tax and environmental policies; and John Tiley(8) and David Williams,(9) co-authors of the chapter concentrating on the United Kingdom. The book is more practical than theoretical, focussing upon specific fiscal measures as well as environmental legislation enacted in the countries covered in the study. The authors of each chapter generally use a positive analysis to describe the administration of tax and environmental programs in the country and to survey the tax laws and other fiscal measures that influence the environment.(10) From that foundation, some of the authors explore proposed measures of environmental fiscal policy, while others venture further, offering commentary and normative criticism.(11)

   Taxation for Environmental Protection is about economic measures, such as taxes, fees, and other government charges or benefits, that have recently begun to receive attention as instruments of environmental policy. Although the book easily could have been a technical treatise approachable only by the microeconomist, tax scholar, or legal theorist, the text of Taxation for Environmental Protection is accessible to the lay person. The reader may credit the book's readability, in part, to the editors' introduction, in which they present the theoretical foundation for using fiscal instruments to promote environmental policy. The editors also classify and define the major types of such instruments, and explore some of the limitations and difficulties that are likely to arise in attempting to institute, specific environmental tax measures.

   The theoretical foundation for taxing pollution(12) can be attributed to economists Pigou,(13) Baumol,(14) and the 1991 recipient of the Nobel Prize in Economics, Coase.(15) In contrast to the conceptual, academic approach of those economists, Gaines and Westin are more concerned with the practical policy applications of fiscal measures and, accordingly, direct the discussion to address specific measures that combine tax and environmental policy concerns. Each chapter of the book covers a different national government's general environmental plan. The chapter then focusses on specific fiscal or tax legislation that the country has passed or proposed for the Purpose of protecting the environment. The editors note that their book is not a strict comparative study, and invite their readers to draw their own conclusions about which mechanisms are the best and which legislation is the most enlightened.(16) In Accepting that invitation, this review sketches Taxation for Environmental Protection's discussion of each nation's approach to atmospheric pollution.

2. France

   In the chapter focussing on France's fiscal and environmental approach, Hertzog traces his country's delayed efforts to create the Agency for Air Quality (AQA), which became operational in 1982. For the first three years of its existence, the AQA was practically devoid of authority. It was designated as a monitoring and informing body that was to prompt, coordinate, demonstrate and carry out initiatives for the development of techniques that contributed to the prevention of air pollution. However, in 1985, the French government gave the AQA the power to levy a parafiscal tax on the discharge of polluting substances into the atmosphere. The AQA allocates the revenues of that tax to fund the fight against air pollution. The tax, payable by all private and public parties, affected approximately 480 plants in 1985 - including waste-incineration plants, industrial processing plants, and collective heating plants. The AQA imposed the tax on installment exceeding certain standards based on both consumption of combustible material and annual discharges. Costs of administering the tax, that is, the costs of assessment, verification, and collection, amount to a small portion of the revenues generated, which is surprising given the broad base of the tax. One reason for the low administration cost is that the tax does not vary according to the fuel burned; it is levied strictly on caloric power and emissions. Another reason - one that is criticized by ecologists - is that French law limits the tax to only two types of air pollution: sulphur oxides and nitric oxides. In 1990, the French government expanded the tax base of the atmospheric pollution tax from 480 plants to 870 by lowering the taxable threshold.

   Hertzog's discussion of the difficulties of setting the tax rate is...