Fiscal And Environmental Tax Revenue example essay topic

Do you reconcile the introduction of environmental-based tax rate differentiation as well as new environmental taxes with the traditional objectives of fiscal reform: tax simplification, fiscal neutrality (not affecting behavior) A 1. This has to be done very carefully, as introducing new taxes that are related to the environment, can dramatically affect peoples behavior. If you levy new taxes on vehicles that produce high amount of pollution, like Sport Utility vehicles people are no longer going to purchase those vehicles. This tax is something that has to be eased on to the public and the public has to be educated as to how these environmental taxes will work.

The bottom line is that the public needs to be educated as to why these taxes are being levied. Q 2. With the exception of a lump-sum tax, all conventional taxes have distortion cost in the form of affecting the taxpayers economic behavior: work-leisure choice, consumption-savings allocation, etc. Wouldnt environmental taxes have the same dead weight loss by affecting consumption and production behavior A 2. These taxes would not be a dead weight loss because after the public was educated, I believe that they would be aware the there was considerable environmental benefit involved with these new taxes. They also might make people think twice before polluting the environment, because they may realize that the end result is that they are paying to clean it up.

Q 3. What is the distributional incidence of environmental taxes Or, Who benefits and who loses from specific taxes, how can distributional concerns, a major constraint to the acceptability of environmental taxes, be addressed in a satisfactory way A 3. The general public are those who will benefit from these new taxes, due to the fact that pollution will be reduced and the environment will become cleaner and a better place to live. This tax also improves income distribution, and will be distributed proportionally across the board. It will also improve the environment by saving money and realigning polices that are setup as an incentive to practice environmentally sound practices. This is set up to improve economic efficiency and reduce waste that is produced by public and state enterprise.

The distributional cost will be addressed through a proportionally distributed tax, and not a disproportion tax that benefit the rich. Q 4. How do you address International competitiveness concerns raised by industry with regard to (unilateral) Introduction of environmental taxes A 4. This should be handled very carefully, if taxes are introduced unilaterally, this could risk pricing itself out of the market. The reason for this is if the taxes were to dramatic, companies may take their industry, and plants outside of the country, thus loosing millions in other types of tax revenue, jobs and other economic well being. Q 5.

At what level should taxes on particular products be set in order to reflect the environmental costs associated with their production and use A 5. Tax levels should be set so that they dont exceed a certain percentage of the cost of the product. If there are situations in which the products environmental cost would be higher than the cost of the product, there should be some type of tax ceiling; a fair figure would probably be around 25% of the cost. These levels should be set in order to maintain control on pollution, while at the same time, not making them so expensive so that the specified product is priced out of the market, reducing demand, forcing consumers to seek a substitute product. Q 8.

What is the preferred type of environmental Taxes What determines the choice between direct taxes (on emissions) and indirect taxes (on products and inputs) A 8. The preferred tax is a direct tax which typical which will affect industry, and consumers depending on their income and amount that the pollute. Indirect taxes are unfavorable because they put a tax burden on products such as food clothing and shelter, which are the commodities that the poor spend a higher percentage of their money on in relation to those who are wealthier. The government when implementing taxes determines, how much revenue needs to be created, and how they me obtain the most exposure to pay for the tax. For example those who use The Mass Pike are taxed by paying the tolls. This doesnt cover the entire cost of operating the highway system, but subsidizes the operating cost.

Q 10. What is the difference between taxes and charges Under what conditions are environmental taxes and charges identical Which do you feel is politically more acceptable A 10. The difference between taxes and charges is that the charges were set up after the damage was done, and the tax was setup to correct the problem that the pollution created along the way. The wanted to charge the farmers for water, but others said that they couldnt afford it. Taxes and charges are very similar in the way they work they are both there to curve pollution and to correct it after it occurs. Q 12.

How do you make the introduction of environmental taxes socially and politically more acceptable How do you ensure public and political support In other Words, How might environmental taxes be introduced with the minimal amount of resistance and disruption A 12. These environmental taxes must be slowly introduced to the people, through billboards, commercials and editorials that describe the condition of the environment, The after this has been established these can be followed by a campaign on how to reduce pollution and increase the well-being of the environment. This campaign can be the base for the introduction of the new taxes. Once people know of the state of the economy, they may be more willing to accept these new taxes. Q 14. Is there a strong case for earmarking environmental tax revenues for environmental expenditures under what circumstances If environmental taxes are introduced as incentive systems (rather than as revenue raising mechanisms) shouldnt environmental investments are financed by general tax revenue What are the usual reasons for objecting to earmarking the Finance Minister Alluded to A 14.

In this case tax revenues should be spent to correct the environmental problems, the nightly brown outs are not acceptable. This tax revenue should be allocated and dispersed to help remedy the environmental problems. This general revenue should finance them so that these problems will be fixed and at the same time the amount of pollution will decrease because people will not want to pay this environmental tax. They felt that the fiscal and environmental tax revenue was being wasted, they were dumping this money in to the system with no change, and there were no new innovative ideas. Everyone was only concerned with their sector, and was happy with the continuation of status quo.