Global Conference on Environmental Taxation

H. William Batt

[A report of the Seventh Annual conference, held in Ottawa, Canada, 22-24 October, 2006. Reprinted in GroundSwell, January-February 2007]

What began as a brilliant conference idea by four academics in Cleveland in 2000 has blossomed into an annual worldwide meeting of minds attended this year by over 250 people. It continued as an annual event then to Vancouver, to Vermont, to Sydney, to Italy, to Belgium, and this year to Ottawa. Next year is Munich's turn, then on to Singapore in 2008, Lisbon in 2009, and Bangkok in 2010. I presented two papers at the Woodstock, Vermont conference in 2002 where there were about fifty attending at the semi-private "Woodstock Inn" owned by Lawrence Rockefeller. I was delighted to see what has grown in four years since. As I did in 2002, I brought along enough big yellow buttons that say Tax Bads Not Goods for everyone to have one. It identified me for networking, and advertised the Schalkenbach Foundation as the source of materials I made sure were well displayed right across from the registration table. The Germans now also distribute the same button!

Constitutionally speaking, governments have at their disposal only two instruments by which to effectuate policy -- what are conventionally known as "police powers" and "tax powers." To be sure, not all revenue streams come from tax powers -- witness traffic fines and tolls, various permit fees, and pollution charges, which are typically grounded in the police powers of government. Tax powers are usually those associated with income and franchise taxes, property and sales and use taxes, various tariffs, and so on. Over time public finance theory has thought of revenue largely in terms of a means by which to support public services, and tenets of taxation were supposed to interfere with commerce as little as possible. The best taxes, it was thought, should "rest lightly" on the economy so as not to distort or inhibit free traffic in trade. So the ideal tax should be neutral, efficient, equitable, simple, administrable, and stable. The terms have varied somewhat from text to text, sometimes shrinking to four in number, often expanding to include certain, compatible, and transparent.

But neoclassical economics has had no place for the concept of land rent, having discarded it along with the separate category of natural resource capital -- i.e., "land" as used in classical and Georgist economics. So contemporary economics, helped by the work of Arthur Pigou, has invented the concept of externalities, relying on corrective tax mechanisms to recover what costs are imposed on society. But it can be cumbersome and difficult to apply in the real world. Nonetheless, this is the framework that dominates the thinking of most green tax conference participants. To most, environmental taxation is a matter of cleaning up around the edges of a basically sound economic system. If the keynote speaker, Lester Brown, spoke about the dire need to wean ourselves from fossil fuels, it was still envisioned within the framework of conventional free-market models. But there is a place for Georgist thought in this community of discourse, as many conference participants are very close to fathoming what it is that we are talking about. Collecting economic rent from the goods and services of nature would efficiently address a good part of what green taxers would like to see come about.

With the world focused increasingly on greenhouse gases and global warming, many of the sessions were devoted to various means of addressing associated with fossil fuel consumption, toxic materials, transportation, and the instruments that create them. Most of the remedies considered, however, were piecemeal and targeted; little by way of comprehensive theorizing was put forth. About half the presentations were case studies.

It was also interesting to hear described the variety of approaches being explored by the presenters, coming from a total of thirty-one nations. One might have thought it would be dominated by economists, but in fact the lawyers seem to outnumbered them. Most attendees were public sector officials or academics, but there were a number of NGOs represented, and even a few private sector people -- like someone from Honda, notably! I noted that the Europeans seem to be further ahead in their application of environmental taxes than any other places. The size of country seems not to matter much. Considerable discussion was devoted to whether green taxes inhibit economic competitiveness, and this seems to be the excuse for much of the Canadian lag, fearing loss of business to its neighbor to the south. But Europeans already have their answer. Canadian government officials, researchers, academics, non-profit representatives, and students were there in such substantial numbers that one would expect an impact on policies to occur soon.

As much attention was given to reducing and eliminating subsidies for detrimental practices as to the institution of green taxes themselves. Germany, for example, has taken significant steps to replace many of its harmful practices, even though the evidence is just beginning to bear fruit in data studies. The European Community is working assiduously to integrate its environmental measures, many of which involve adjustments in their tax regimes. The greatest advances appear to be possible in the energy and transportation sectors, even though these measures often involve international cooperation and cannot be effectively imposed on a country-by-country basis. Many of the sessions explored means by which to enhance international cooperation, especially within the framework of the Kyoto protocol and whatever is likely to follow.

Lastly, there were several panels on how best to integrate and chose between command-and-control approaches and taxing approaches, recognizing that governments have been too often tempted to rely overly on the former. The greatest limitation, in the minds of several observers, is the lack of adequate data, making it difficult to demonstrate the feasibility or success of various measures proposed or already in effect. That a conference dominated by lawyers should have reached this conclusion is remarkable, and it suggests that there is ample potential for more work in this area, both for research and advocacy. The Munich conference in October, 2007, sponsored by Green Budget Germany, www.eco-tax.info, promises to bring even greater interest and cogency to a burgeoning new field of discourse.