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Tax energy rather than income | |||||||||||||||||
One of the most effective ways to reduce CO2 production is through improved efficiency. Simple common sense stuff; Lagged hot water tanks, slightly lower temperature water, cavity wall insulation, secondary glazing, properly inflated car tyres, new air filters, fluorescent lightbulbs, switcing off TVs and videos at night. The problem is people don't care, they aren't going to save all that much money. To make them care you have to make it worth their while, make energy an expensive commodity worth saving. What if, instead of income, we taxed energy consumption. Not as mad as it sounds. Power (the rate of energy consumption, kiloWatts or HorsePower) is literally a measure of how quickly something can perform work, essentially this would be a switch to taxing machines labour rather than human labour, after all they do a lot more of the work than we do. At the moment, we tax human labour through income and sales taxes. Overall in any of the developed countries about 30%, 40% of a person's income is grabbed by the state for use elsewhere. For a start that makes employing people expensive. So, over 10 years or so get rid of income tax, all of the sales taxes and put it on the energy companies fuel sources. Do it in a tax neutral manner, the more fuel they use the more you pay. It would also simplify the taxation system hugely. It could be done directly at source, non renewable energy producers. There would then be huge incentives to reduce energy consumption, to switch to alternatives, to make use of more localised distributed energy generation and every improvement in efficiency would become worthwhile. It's entirely possible to build dwellings which are insulated so well that they require no space heating, it just isn't worth our while to do so at the moment. It's possible to build power stations which are 88% efficient, which sell their "waste" heat to consumers through district heating and cooling networks, as well as the electricity, again... It isn't worth our while to do so at the moment. It would also give humans a big advantage in the job market over machines, at the moment we are very heavily handicapped by the tax system.
Mr. Precision, Sep 18 2005
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Good suggestion--it can be generalized to "tax bads, not goods." Taxes are most reasonable when they tax things that impose a cost, such as pollution, on society in general. A good government resolves externalities, a bad government encourages them.
This idea sounds great, but energy efficient material is mostly expensive right now. The people who will be most affected by this tax are lower income individuals.
Sorry? You think glass fibre loft insulation, expanded polystyrene are expensive?
Before adding taxes, why not start by removing subsidies?
This is very interesting, but there's one problem: what happens when it works? Let's say everyone is really fed up with the tax and realize that it is in their power to avoid it, so everyone becomes as energy efficient as can be. Then the treasury dries up.
At any given *and fixed* tax rate, if people use less energy, tax revenue will be less that's true. However danger that treasury will dry up i.e. we will use zero energy is only theoretical. Simple way to preserve necessary tax revenue stream - if energy usage goes down - is to increase energy tax rate ($/kWh). Or, if energy usage goes up and state coffers are overflowing, rate could be decreased.Of course there always would be a lot of discussions, by how much etc., but in general taxing energy usage instead of income is an excellent idea.