Title: [GreenYes] Re: Landflll economics
Thank you for responding to my comments. At the core of my argument I
was trying to make the point that the notion of "internalizing
externalities" (or capturing marginal social costs) is not without a
certain degree of complexity. Unless a government agency has
carefully weighed potential tax incidences and consequences in the
specific case, there is a potential for market distortion (unexpeced
business decisions by market participants). An example of this
phenomena would be raising a tax too high and then observing in
increasing in tax cheating.
The most successful cases I've observed in local government (often
related to utility rates) are related to "avoided costs" or, as you
put it, "costs of preventing damage." I would just asert that this is
not a true application of Pigou. However, I concede this last point
might be quibbling.
With regard to transaction or administrative costs, in my experience,
I completely agree with you and Gary regarding the efficacy of
upstream (rather than downstream) fees. Not only do they have lower
administrative costs, the incidence of the tax (who pays?) falls on
the party most responsible - the producer.
The apparent nature of regressive taxes is controversial. There are
many in our field whom I have argued this point with and their points
are often the same ones you make. One way local governments can avoid
regressivenes is to implement robust environmental justice programs in
thier community. Use funding from pollution taxes to shut down
polluting industries, provide assistance for energy conservation and
alternative energy, provide assistance and targeted outreach to low
income rate payers, etc.
Lastly, as you point out, long-run tax revenue decline is the result
of successful programs. Local governments choosing to implement these
fees should consider if their programs and, most importantly, their
staffing practices are sufficiently flexible to cope with future
declines in revenue.
I gotta get back to work. Thank you all. This is fun stuff.
On Nov 1, 4:00 am, precycled <goo...@no.address> wrote:
> Hi Gary
> Interesting tactic to start with downstream disposal fees and then
> switch to upstream producer fees. This may be politically easier than
> going straight for the more efficient upstream fees, especially where
> disposal taxes of any kind already exist.
> Landfill taxes such as in the UK are probably not worthy of Pigou.
> They were carefully designed not to apply to all forms of disposal (eg
> dumping to air) in an attempt to meet the 1999 EU Landfill Directive
> without having to rethink running economies dependent on making waste.
> The funds from Landfill tax go straight to the Treasury, not to clever
> processing of organics. Government's primary tactic for getting
> organics out of landfills is an expansion of national incineration
> infrastructure with secretive 30 year public-private finance deals
> that will be paid via local taxes on the unsuspecting public. We can
> guess the actual lifetime of this infrastructure given the UK
> government's intentions to cut Greenhouse Gases by at least 60%.
> Please see further comment below...
> > Gary Liss wrote:
> > I suggest that Pigovian fees and
> > taxes also consider helping to decrease the
> > uncertainty and help in capitalizing the Extended
> > Producer Responsibility (EPR) systems that we
> > advocate. They could do that by setting up a
> > grant program with revenues from tipping fee
> > surcharges that funds startup costs of industry
> > sponsored EPR systems, IF the industry commits to
> > levying whatever fees are necessary to keep those
> > programs going over time.
> > The level of Pigovian fees and taxes being levied
> > in Europe is on the order of $20-40/ton, in order
> > to fund initiatives to phase organics out of landfills.
> > Gary
> Hi Paul
> Yes, costs of externalities are not generally knowable, due to
> complexity and time-delays. Future unpredictable costs cannot be
> included in current prices. Whilst the costs of damage can inform
> policy-making, it is the costs of preventing damage that are possible
> to generally include in prices.
> Transaction costs are important. Can be minimised in various ways -
> two in particular. 1: Include the predictable costs of 'solutions'
> rather than the unpredictable costs of damage. 2: Impose fees upstream
> (producer pays) rather than downstream (user pays). Producers are
> easier to keep track of than users and individual products.
> Good to consider the regressiveness of externality reforms but also
> the regressiveness of today's unreformed economics which seems to
> generate inequalities very impressively. Any effective reform would
> use both price signals and investments of fees, meaning that some
> prices fall while others rise. There is also a gain, available to the
> less wealthy, from the greater resource efficiency of not dumping
> resources. For example employment in locally sustainable activities,
> cheaper refurbished goods, better community cohesion and freecycle.
> Not sure if surplus revenue will be widely considered a problem in a
> world with more urgent tasks than funds.
> If revenues from externality reforms fall this would suggest the
> externalities also are falling - something to celebrate? Society is
> some way from this happy scenario in which regular taxes (on profits
> from business and labour) need not be falling.
> Please see further comment below...
> > At 03:45 PM 10/31/2007, paul.lede...@no.address wrote:
> > a criticism of Pigovian tax policy centers around two
> > >assumptions that must not be treated lightly. (1) It is assumed that
> > >the appropriate Pigou tax increment is knowable. In my experience
> > >this is a fat assumption.
> > (2) It is often assumed that
> > >the transaction costs for administering a Pigou tax is low (or near
> > >zero). This is in many cases not true. Administrative costs related
> > >to environmental taxes is often costly.
> > >There are other problems with Pigou taxes that could be discussed:
> > >-Inherent regressiveness of Pigou tax policy
> > >-Problem of surplus revenue
> > >-Diminishing tax revenue in the long-run
> > >Paul Ledesma
> Hi John
> Valuable distinction between fees and taxes. This tells us that
> economic interventions don't have to be run by government even when
> government brings in the enabling laws. It also reminds us that the
> fee brings us something in return even when this benefit is shared.
> You provide examples of some of thousands of existing and potential
> fees for addressing different externalities and products. The sheer
> number of possible fees is an obstacle to their introduction. More
> fees means more administrative overheads, more market distortions and
> more work for busy legislators. Hence my research on minimising the
> number of reforms needed for a sustainable economy. The latest paper,
> under review in a NATO Science Programme Advanced Research Workshop,
> attempts to cover most sustainability issues (including solid wastes
> and climate change) with one instrument and international security/
> weapons spending with another. Seehttp://www.blindspot.org.uk/papers.html
> - criticisms welcome.
> Best wishes
> James Greyson
> > >On Oct 31, 9:26 am, "Reindl, John" <Rei...@no.address> wrote:
> > > I specifically used Pigouvian 'fees'
> > > rather than Pigouvian 'taxes'. I view taxes as
> > > an amount paid regardless of the impact or
> > > level of service received -- such as income,
> > > property and sales taxes. Fees, however,
> > > reflect the impact imposed or the service
> > > delivered,.such as a recycling or advance
> > > disposa fee when purchasing a computer (this
> > > often takes the cost off local taxes), or a fee
> > > to build roads based on the amount of gasoline
> > > used, or the fee that we should be paying for the carbon we put in the air.
> > > John- Hide quoted text -
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