Saturday, July 30, 2005

"Tax what you don't want; don't tax what you want."

Governments need revenue, but the best way of raising it is through taxing behaviors that have social costs, like smoking, drinking and gambling.

Right now in the US, we tax some good things: jobs (Income Tax, Social Security withholding, etc.) and commerce (sales tax in most states).

In Europe they tax all stages of economic activity with the VAT - Value Added Tax.

Meanwhile there are many undesirable things we don't tax: driving a Hummer, bad haircuts, stupidity, etc.

While I can't see taxing any of these, there is something that hurts all of us that is not now taxed: toxic synthetic industrial chemicals.

What if we taxed these substances?

Let me tell you a true story:

I worked for four years in the printed circuitry industry. We had one process that used a plastic photo-resist which was washed away using Methylene chloride (MC), a potential carcinogen. Workers were exposed to it, and we also released it to the air and water outside the factory.

It was time to replace this wash machine, and we were evaluating two technologies: the plastic/MC one, and a new environmentally friendly one that used Cellulose, a natural plant product, for the resist, and detergent (dish soap) for the wash. The cost of the two processes was equal. We went with the old MC process, because changing to the new process would have involved Engineering hours to understand and fine-tune the new process.

Now what if there had been a "Toxin Tax" on the ~5,000 gallons of MC we used over the course of, say, two years, that was approximately equal to the cost of the Engineering hours required to switch technologies? We could have justified the switch on economic as well as environmental terms. We all would have been better off without the release of MC into the environment, AND we would have given good employment to an engineer!

The Centers for Disease Control publish an annual list of the top 20 toxic substances in our environment.

What if we said today that, over the next ten years, we would gradually add a tax to these products?