PR from Basque research:
Environmental fiscal reform would improve the environment and reduce the informal economy
The effect that the introduction of environmental fiscal reform would have on an economic system has been the focus of study since the 1990s. However, studies of this type have until now failed to take the informal economy into consideration; this is an activity which in the case of Spain, for example, could account for as much as 20-25% of GDP. The group of researchers of the UPV/EHU and the BC3 have addressed this subject and have concluded that environmental fiscal reform could help to cut the damage caused by the informal economy on the public system apart from the environmental benefit it would bring in its wake. The journal Energy Economics has published the online version of the work and will shortly be issuing a print version.
As different environmental problems have been emerging, many pieces of academic work have been produced to study the possibility of incorporating environmental fiscal reform and the effect this would have on the economy. Environmental fiscal reform is one of the possible channels for addressing environmental problems and basically consists of levying taxes on the activities associated with environmental problems, like CO2 emissions, and cutting other kinds of taxes. “Environmental taxes manage to get consumers and companies to pay for the damage sustained by society as a result of pollution. What is more, they can be very effective in some cases because they can succeed in bringing about changes in our habits or behaviour and thus lower pollution,” explained Mikel Gonzalez-Eguino, one of the researchers responsible for this study.
The raising of taxes by public bodies through the tax system usually finds itself undermined by the so-called informal economy, in other words, the economic activity that does not pay any tax, and which is “a significant, growing proportion in terms of GDP in many developed economies,” pointed out González-Eguino. In Spain and in other countries in the south of Europe it is reckoned to have a volume equivalent to 20-25% of GDP.
In the fiscal reform being proposed by this group of experts, the income produced by “green taxes” would be used to cut the taxes on labour to the same extent, since “in this work we didn’t want to get involved in the argument about what the optimum size of the public sector should be,” as González-Eguino carefully explained. With the reform we are just guaranteeing that the necessary money would be collected to maintain the existing public services but a greater burden would be placed on pollution and a lesser one on labour.”
The researchers used economic models to simulate how a reform of this nature would affect the wider Spanish economy. “We used a methodology known as computable general equilibrium which allows us to take all the economic sectors into consideration and in that way to analyse policies that affect the economy structurally. What is new is that we have included the informal economy, which previously conducted studies had not taken into consideration.”
The tax system would emerge strengthened
In the simulations made the researchers observed a greater benefit for the public system than they had expected. “When an environmental tax is introduced, the groups that do informal work start to pay taxes by the indirect channel of consumption. If tax on labour is reduced at the same time, a reduction in the inefficiency of the tax system and an effective cut in fiscal pressure are achieved. In other words, it produces an increase in economic activity, a cut in unemployment and a cut in the informal economy.”
As regards the possibility that the proposal made by this study could become reality, González-Eguino stressed that “this study reinforces the idea that environmental fiscal reform could be highly beneficial and would allow us to put figures on one of the recommendations that several international bodies have been making to us for a long time.” However, he does not ignore the limitations they have come across in the course of the study: “For example, the associated rise in energy prices could be counteracted by the increase in real wages, but for inactive people, pensioners and unemployed people especially, this effect would not exist. The possible regressive effects of these reforms on the more vulnerable groups, in particular, would have to be analysed, and mechanisms that would correct these effects, should any arise, would need to be included.”
###
Markandya, A., González-Eguino, M., Escapa. 2013. (Forthcoming). From shadow to Green: linking environmental fiscal reforms and the informal economy. Energy Economics. 35.2.
http://www.sciencedirect.com/science/article/pii/S0140988313002090
Fascist fascist, we all fall down…
“Environmental fiscal reform is one of the possible channels for addressing environmental problems and basically consists of levying taxes on the activities associated with environmental problems, like CO2 emissions, and cutting other kinds of taxes.”
Since when has a government – ANY GOVERNMENT – actually cut a tax? All this will do it pile this tax on top of all the others!
Anybody who falls for this is a bloody IDIOT!!!!
Revolt against these destroyers of freedom, expose them, throw them out of government, tar and feather them, harass them and force them to crawl BACK under whatever rock they slithered out from.
Newspeak: “informal economy.”
Oldspeak: “beyond the submission to a centralized command and control authority.”
Yes, the Spanish government will doubtlessly exchange heil fives all around if this passes.
It’s all about control, always has been.
What a crock…
Indeed the ‘Polluter Pays Principle’, which was formally adopted through the Maastricht Treaty in 1992, sets the aim that external costs should increasingly become internalised. Therefore, if mandatory targets related to renewable energy were to be implemented to reduce the external costs associated with the use of energy, what are the relevant external costs and additional internal costs incurred in avoiding them? Clearly the report below, which the EU Commission was required to complete by the end of 2005, under the first Directive on renewables (Directive 2001/77/EC ), was extremely important in this regard.
• “Consider the progress made in reflecting the external costs of electricity produced from non-renewable energy sources and the impact of public support granted to electricity production”.
Unfortunately this report was never completed even though there was a legal obligation to do so. The external costs of non-renewable energy sources, in particular those related to the greenhouse gas emissions, were never assessed. Instead the EU Commission progressed ‘head first’ into an even bigger renewable energy programme, in a manner which was even more negligent, as it by-passed the necessary measures related to proper assessment.
So to summarise, the environmental impact of the non-renewable generation of electricity, which was deemed so critical to be replaced with renewable sources, was simply never assessed. Despite this huge cost was to be ensued, both financial and environmental, in the roll out of massive renewable energy programmes. So what was used to justify this cost?
If one considers the documentation prepared in the build-up to the 20% renewable energy target, one of the main documents which formed the basis for the target was the EU Commission’s “Renewable Energy Road Map Renewable Energies in the 21st Century: building a more sustainable future”, COM (2006) 848 final . This stated that:
• “Greenhouse gas emissions, including CO2 emissions, from renewable energy sources are either low or zero. Increasing the share of renewables in the EU fuel mix will therefore result in significantly lower greenhouse gas emissions”.
Indeed, COM (2006) 848 Final claimed that the additional renewable energy deployment needed to achieve the 20% target would reduce annual CO2 emissions in a range of 600-900 million tonnes (Mt) in 2020.
The source of this claim was the PRIMES computer model used by the Commission, a computer model which has caused a lot of controversy, as it remains the private property of the National Technical University of Athens. While assumptions are published, independent parties cannot replicate the results. In the EU Commission’s consultation on the “Energy Roadmap for 2050” , it is reported that a few organisations from diverse sectors criticised the PRIMES model regarding its transparency. Note: Only a few organisations would have the technical skills to evaluate the function of such a model. Furthermore, the Final Report of the Advisory Group on the Energy Roadmap 2050 was clear :
• “Recommendation Fifteen: The PRIMES model should be made publicly available so that its results can be replicated by interested parties and to the extent that the PRIMES model is used to support the Roadmap, the assumptions and technology costs should be made explicit”.
With regard to the claim of 600-900 Mt of greenhouse gas reductions in 2020, which is the justification for the 20% renewable energy target, no allowance was made in the PRIMES model for the increased inefficiencies, which are occurring on the grid, with resulting higher fuel consumption and emissions, as more and more intermittent renewable energy is placed on the grid . In this context it has to be pointed out that in 2004, Eirgrid produced an engineering report on the impact of wind energy and its intermittency on the economics of operation of conventional plant. This concluded that:
• “The adverse effect of wind on thermal plant increases as the wind energy penetration rises. Plant operates less efficiently and with increasing volatility”.
The report highlighted not only the practical limitations, but also the very high cost associated with wind energy given other far more cost effective alternatives available for carbon abatement. It was ignored.
While one cannot replicate the PRIMES computer output, the assumptions used by the EU in ignoring the induced inefficiencies on the generating station, as more variable renewable energy is added, are clearly false. Furthermore, it is important to point out that the PRIMES model did not define what was to be built in each Member States, where it was to be built, how it would operate, etc.
Unfortunately, worse was to follow. If we consider again COM (2006) 848 Final, the Renewable Energy Road Map, it is stated in Section 4.1 on the Impact of greenhouse gas emissions and other environmental impacts:
• “The additional renewable energy deployment needed to achieve the 20% target will reduce annual CO2 emissions in a range of 600-900 Mt in 2020. Considering a CO2 – price of €25 per tonne, the additional total CO2 benefit can be calculated at a range of €150 – €200 billion. Actual CO2 prices will depend on the future international climate regime”.
So where did this cost, benefit analysis come from, this being essentially the sole benefit to justify the 20% programme? It has to made clear that this is not a cost, benefit analysis, it is a political statement; the €25 per tonne was based on the expected trading price for carbon dioxide. What dictates that price? It is dictated by the number of allowances, which are available in the EU Emissions Trading Scheme. How is the number of allowances determined? This is determined by a political decision. In reality in 2013, such carbon prices have been trading in the range €3 to €5 per tonne. Simply put, that there is a CO2 benefit related to the 20% renewable energy by 2020 target, which can be calculated at a range of €150 – €200 billion, is a false statement, based on not a single verifiable scientific fact.
Viva la bitcoin. To hell with the government controlled formal economy.
Part of the paper is an old argument: Any total tax take can be raised by many different compositions of taxes. As the damage done by a tax is roughly equal to the square of its level, it makes sense to reduce high taxes (income in Europe, profits in the US) and increase low taxes (environment).
The informal economy is a new twist. In countries like Spain, informality is mainly to avoid paying income. A lower income tax would thus reduce informality; and this means that tax rates in the formal economy can fall while keeping total tax take constant.
The logic is impeccable. Its implementation in practice is a different matter.
The “settled science” of expanding government revenue to keep up with expanding statism.
The logic is impeccable. Its implementation in practice is a different matter
What you mean like the logic of communism, marxism, leninism, fascism, socialism. All great logics but implemented by thugs, crocks and thieves.
Solves the problem of too many choices and too many freedoms. Win, win – what’s not to like?
/sarc
I guess informal economy a euphemism for the black market?
Anyway:
I’ve always suspected (and have become more and more confident of this over the years) that anybody over the mental age of 14 who buys this idea that a tax is going to increase economic activity and cut unemployment is deliberately being dishonest with themselves. It’s sort of like convincing yourself that you can throw yourself at the ground, miss, and thereby discover the secret of unassisted human flying; it’s obviously incorrect.
Of course, I missed the fig leaf If tax on labour is reduced at the same time, sorry about that.
@Mark
Indeed. The “informal economy” is the technical term for the colloquial “black economy”, that is, all those activities that are neither licensed nor taxed.
Oldspeak,
Newspeak,
Kleptospeak.
I had no idea,sarc, that I was so destructive to society.
As govt taxes behaviour it wishes to discourage, my behaviour must be particularly odious.
Income is obviously a crime against society as is the hard work put into producing that income.
I see the error of my ways, I promise to stop any productive activity.
RichardTol,
Yeah. I missed the reduce high taxes part on my first scan. /blush
That’s 100% UN Agenda 21, currently rolled out in Europe.
I call it treason from within.
All it will lead to is the next slaughterhouse if we don’t stop it.
“…
Environmental fiscal reform is one of the possible channels for addressing environmental problems and basically consists of levying taxes on the activities associated with environmental problems,
…”
[+emphasis]
Sing Johnny-one-note.
Yikes RichardTol is on this thread I’ll sit down and shut up now. :>
“Everything within the state, nothing outside the state, nothing against the state.” – Benito Mussolini
War is coming. Either the old-fashioned kind, or the “new” state-vs-people variety.
The *only* way to achieve these goals is a totalitarian police state. And if your goal requires that, it’s time for a new goal.
Here we see the creation of a tax system that will decide who is productive in a sustainable manner and who is not.
Those who are not or no longer productive will be forced to participate a sustainable program that will reduce their Carbon Footprint to ZERO.
I regard a tax system like that as a declaration of war against humanity.
It’ them or us now so make up your mind.
When anyone refers to the informal economy, I believe this is a way of talking about the private wealth in a country. While GDP is an important guage of economic activity and stability, it is not the most important indicator of wealth. In Five Myths About China, Dean Cheng and Derek Scissors, Ph.D write:
“One year of production is not “the economy.” A much superior notion of “the economy” is the stock of national wealth—all the assets we have accumulated over time. The stock of American private wealth in 2012 was about $70 trillion. Using the same methods as with American wealth, the stock of Chinese wealth is $20-25 trillion, through government ownership of assets and control of prices make that a very rough estimate. The absolute size of the gap between the U.S. and China may approach $50 trillion. It would take decades to erase.
Or never. The other part of China passing the U.S. is extrapolation. China’s economic performance from 1945-1978 meant very little to its economic performance from 1979-2012. And 1979-2012 is likely to mean very little to 2013-2046.”
The language in the proposed environmental fiscal reform is talking about punishing all activity which can be considered as harming the environment, and so I do not think it precludes the idea that this is a tax on all wealth, any assets in existence and any transaction.
I also think it is possible that the increasing debts in western nations is being justified by comparing the debt – not to the GDP, but that the governments are raising their debt levels in respect to private wealth. One of the most important expressions of private wealth are our private retirement accounts.
As the tax would be levied on energy, one of the most essential needs of life, the people who can’t afford it will be the ones who suffer the most. Regressive taxation will always hit the weakest hardest, even if it does have the advantage of being difficult to avoid.
It’s time to scrape ’em off. Anything that even hints at Green should go. I think R. de Haan is right, they are declaring war on humanity and we all just stand back and watch them get on with it.
1. Unless specifically allocated and tracked by an authority that has enforcement and penalty powers, no Green tax can ever be expected to produced Green results. Non-allocated taxes go into general revenue, and without allocation, cannot be assessed in light of what has been achieved, if any results can actually be identified as coming from the tax at all.
2. Balanced, not just positive budgets, are not in the global mindset. Germany is lambasted by all nations for its current positive budgets. So introducing a tax that reduces another tax is not part of a plan that any (other than Germany) is in favour of. We are living in a world where manipulation of money supply is more important that the quality of the money supply. We are living in a world where the redistribution of money is more important than the making of it or even the holding on of it: tax reduction, even for the “masses”, is not in governmental interests, whether “communist” or “capitalist”.
We are witnessing a shuffling of the deck chairs on the Titanic.
Almost pure idiocy. Central command decides who is right or wrong, who is moral or immoral, and who is central command? The clowns who populate the UNIPCC, the twenty something fools who gave us the ACA, and all the other politically connected hyper sensitive greenish types. I wouldn’t even mind that they get their way. They took away my light bulbs, my car got lighter, my shower velocity went away, annoyances, but I guess I can live with them. Problem is that people who advocate schemes like this are ALWAYS wrong. It never works out the way they plan. Moreover, I’m starting to think economists are a bunch of crackpots.
It’s the EU – they’re flat broke, borrowing from Germany, their windmill craze dumped tens of thousands on the unemployment lines, and the EU still doesn’t get the message – you’re flat broke! Period! You can’t raise taxes in any form when you have no employment. People need a job to be taxed in the first place. Guys – you have run out of other people’s money!
Zeke says:
December 27, 2013 at 12:05 pm
“When anyone refers to the informal economy, I believe this is a way of talking about the private wealth in a country”.
No it isn’t. It is the underground economy, the money made with illegal activities and all work.performed without paying taxes. Black money. In this case the informal economy (ending the informal economy) is used as an argument to get this legislation introduced.
Of course the entire plan is utter junk as it will put every citizen in place comparable with the position of the ice breaker currently stuck in the ice of the South Pole.
No way to go.
This tax proposal is a dead end street.
“In the fiscal reform being proposed by this group of experts”
Should we really be listening to a group of economic experts from a country whose economy is, (how do I say this without starting a riot), producing less than desirable outcomes.
” Environmental fiscal reform is one of the possible channels for addressing environmental problems and basically consists of levying taxes on the activities associated with environmental problems, like CO2 emissions, and cutting other kinds of taxes. ”
In a dream world.
In one sense an environmental tax could be useful. Think about taxing imports from polluting countries like China and India. However, whenever a tax is imposed by opinion, it eventually becomes biased. In the long run they all become corrupted.
Yet another glowing triumph from the social modelers! And it was once laughably understood that ‘green’ taxes would supplant taxation from other sources.
What seems clear is that no matter hard progressive academic and policy devising socialists try, no matter what unholy constraints they impose on human freedom, no matter how hard they endeavour to cripple and stymie personal ingenuity, human nature does not respond well to the pressure cooker social and economic control. The ‘informal’ or shadow economy, black market or underground economy, remains the life blood for very many and always will, even if the banksters are successful in their achievement of a cashless society.
The alternative ‘real’ economy (as opposed to the controlled construct) is a vital inconvenience.
F Schneider (2008) http://www.eap-journal.com/archive/v38_i1_8.pdf
‘a government may not have a great interest to reduce the shadow economy
due to the facts that:
(i) tax losses my be moderate, as at least 2/3 of the income earned in the shadow economy
is immediately spent in the official economy,
(ii) income earned in the shadow economy increases the standard of living of at least
1/3 of the working population, and
(iii) between 40 and 50% of the shadow economy activities have a complementary
character, which means that additional value added is created, and this increases the
official GDP.
(iv) people who work in the shadow economy have less time for other things like going
to demonstrations, etc’
Is this referring to the same Spain I read about several times with fiscal issues?
http://globaleconomicanalysis.blogspot.com/2013/05/read-between-lines-imf-admits-spain-is.html
The same Spain that wants to stop protests?
http://globaleconomicanalysis.blogspot.com/2013/12/twenty-three-hurt-in-spain-protest.html
The same Spain that wanted to tax sunlight?
http://globaleconomicanalysis.blogspot.com/2013/07/spain-levies-consumption-tax-on-sunlight.html
Gheeze!
I love the irony of the EPA using Spainish economic models to try and show the efficacy of insane plant-food taxes….
Spain has a 25% unemployment rate, it’s national debt exceeds its GDP, their gigantic wind/solar projects have devastated their competitiveness and helped destroy their industrial sector.
Implementing CO2 taxes will increase energy prices which will have a domino effect by increasing prices on everything, which will cut exports, increase our trade deficit, increase unemployment, decrease tax revenues, increase deficits, devalue the US$, etc.,
Statists will destroy the world economy with their foolishness.
The proposal relies on this assumption- “A lower income tax would thus reduce informality”
In the real world, I think this assumption is BS.
The informal economy would thrive even if income taxes were reduced to zero, because the informal economy exists for many other reasons- to avoid licenses, avoid liability, avoid permits, avoid use of currency, swap services, avoid property taxes, use discarded materials, avoid a plethora of government fees, tariffs and fines, hide assets, bypass IP, etc, etc.
If energy taxes skyrocket, then I predict the informal economy will actually grow as energy resources are added to the list of goods and services that are bartered and traded with or without the use of currency.
‘ …….COULD account for as much as 20-25% of GDP’. There’s that word again.
And the cost to implement this ‘environmental fiscal reform’?
And the reactionary adjustment of the ‘informal economy’?
A fair and equitable ‘across the board’ tax burden should be the general aim, I think most would agree. However, the dynamics of (real) productivity may indicate that any latent tax resource should be applied elsewhere. Or that the optimum overall level of tax has already been reached.
Stop Press: There’s no bottomless pit and there’s no free lunch!
albertalad,i agree with your sentiment,one small point i would highlight is the amount of jobs destroyed by the EUSSR now runs into the millions,not tens of thousands.
its a very funny article though,the notion that ONLY 25% of the spanish economy is in the black market is laughable,40% would be closer to the mark.not many of the other european nations have aircraft engineers for instance,being paid cash in hand in the major international airports.
italy is probably running the 20-25% figure,and if the uk government keeps up its endlessly increasing tax regime ,it will not be long before it is the same here.
Whenever I hear of a new tax or tax scheme, I have to ask: Where do these people think they have any right to the fruits of my labor, for purposes which always wind up as personal and beneficial to them?
Richard Tol (@RichardTol) says:
The logic is impeccable.
Hardly. The ‘logic’ also contains this bit:
“What is more, they can be very effective in some cases because they can succeed in bringing about changes in our habits or behaviour and thus lower pollution,” explained Mikel Gonzalez-Eguino, …”
So you cut taxes on labour, and raise taxes on “pollution”. Hey presto! Constant tax revenue.
But you expect that taxing “pollution” will change behavior, in order to avoid the tax. Revenues from the “pollution” tax decline. Oops! Gotta make up the shortfall! Time to raise taxes on labor, back to where they were before. Or, preferably, higher than they were before. You don’t engineer an opportunity to raise taxes, without RAISING taxes.
Basically, it is a scheme to raise taxes on everyone and capture a larger portion of the economy for the public sector over the long term, while social engineering over the mid term, and appearing to cut taxes for “the good people” over the short term to lower the initiation threshhold. Typical BS liberal ratchet mechanism.
The informal economy??
Trade between people who know and trust each other will grow as the attempted extortion, regulation and imposition by government grows.
Why would any sane individual pay 3 times as much for an inferior product, merely to avoid government threat of sanction?
I sense a real “ID Ten T” moment here (ID10T). I always have to wonder how many superfund sites could have been cleaned up and fully reclaimed for the amount wasted on the Solyndra and other frauds spawned by this bogus “CO2 is bad” nonsense. Once they declared CO2 a pollutant I knew all sanity had been abandoned.
The fiat Achilles heel of the whole scheme is the difficulty of deciding what is a pollutant and to what extent it should be internalized ie taxed. That’s where bureaucratic tyranny rears its ugly head.
Correction:”fiat” was supposed to have been erased.
SAMURAI says (December 27, 2013 at 1:05 pm):
“Spain has a 25% unemployment rate…” Well, 25 percent of unemployment is an official number, probably half of them are precisely on the informal economy, and you must take into account unfortunately we’ve about 8% of structural unemployment.
“…it’s national debt exceeds its GDP…”, actually not yet, and not the worst between west countries.
“their gigantic wind/solar projects have devastated their competitiveness and helped destroy their industrial sector.” Not exactly, the Spanish industry was destroyed during the 80s and 90s of last century. However, the energy problem is indeed critical in Spain with an accumulated deficit over electricity price of about 50 billion dollars, most of it coming from subsidized photovoltaic plants.
Just for the record. Otherwise I totally agree: statists policies, in any subjet but very specially on Energy, may lead to the bankruptcy of a country… or of many at a time.
Cheers!
A tapeworm can help you lose weight, which might induce some to argue that parasites are good for you. But once you lose your excess weight, the tapeworm does not stop growing or go away. Government, once it goes beyond its main purpose of protecting the public, is similar to a tapeworm. It survives on what it takes from you and uses what it takes to regulate and limit your activities. It never shrinks but only grows larger. It never reduces its consumption once its goals are achieved but always finds new excuses to increase its consumption. Giving government power to tax imaginary pollutants like CO2 is like swallowing a tapeworm to cure anorexia.
It might make sense if CAGW was not regarded as “settled science”. Unless and unitl this is no longer the case the whole idea is a crock. .
Louis says: December 27, 2013 at 2:03 pm
The bureacracies and ‘Government’ become irretrievably addicted to their own self importance, relevance and the seemingly endless money spigot. They fail to notice that they are fast becoming saprophytes.
e.c. cowan says: @ December 27, 2013 at 10:49 am
… Since when has a government – ANY GOVERNMENT – actually cut a tax? All this will do it pile this tax on top of all the others!
Anybody who falls for this is a bloody IDIOT!!!!
>>>>>>>>>>>>>>>>>>>>>
Took the words right out of my mouth.
Consider: While the USA had its government shutdown this fall, the IMF had their annual meeting by bringing the date forward.
The recommendation: A one time 10% tax on all wealth held by private citizens (Your saving, house cars…) this would reduce US debate back to the level it was in 2008 before the bank bailouts and Obummer. link
Can someone please remind just how vibrant the Spanish economy is at the moment…?
Pat.Swords says:
December 27, 2013 at 11:03 am
http://wattsupwiththat.com/2013/12/27/new-tax-scheme-environmental-fiscal-reform/#comment-1514801
I new that name was familiar.
http://blogs.telegraph.co.uk/news/jamesdelingpole/100232949/wind-farms-are-a-breach-of-human-rights-says-un-no-really/
It might work if it wre not for the claim that CAGW is “settled science’. But unless and until this clim is dropped the whole idea is a crock.
Can I translate this into plain English? What it says is:
We think we have figured out how to avail ourselves of tax revenue from prostitution, drugs, gambling and other illegal activity without admitting that we’re availing ourselves of tax revenue from prostitution, drugs, gambling and other illegal activity.
Fascists discover modelling, for justification!
Environmental taxes manage to get consumers and companies to pay for the damage sustained by society as a result of pollution. What is more, they can be very effective in some cases because they can succeed in bringing about changes in our habits or behaviour and thus lower pollution,”
http://youtu.be/LLCF7vPanrY
Right. Put a tax on CO2. Eventually some wise guy will remember humans emit CO2 and set a limit on how much CO2 an individual may release annually. Of course, that would extend to having kids and how many; have to get permission and all the forms signed and approved in quadruplicate. After all, Those Who Know Better (than us) consider humanity a blight on the earth. A tax on CO2 is the first step toward deindustrialization and depopulation.
Headline: “New tax scheme: ‘Environmental fiscal reform’”
Let me fix that: “New tax SCAM: ‘Environmental fiscal reform'”.
Accurate now.
Environmental taxes, like all taxes, can provide perverse incentives. For example attempts to tax household rubbish by requiring the use of special approved (expensive) taxed rubbish bags will result in some people simply dumping their household rubbish out of the back of the car in a nearby park at night. Are the models they are using realistic enough to capture these kinds of perverse effects? The highly abstract language they are using – speaking all the time about “environmental taxes” without being more specific – makes me doubt it.
I think we should put a tax on dumb unsubstantiated theories that are wasting 0.5% of world GDP every year.
Can we think of one? Global warming of course.
The last thing that should be done is to put a new tax on the efficient part of the economy which is creating jobs and give subsidies to the wasteful part of the economy which is raising unemployment.
The issue is that leftists and environmentalists do not understand how human civilization really works. They believe in unicorns and forcing ever more people to depend on government hand-outs.
Human beings have evolved to be productive and put food on the table and find better ways of doing things. Finding better ways of doing things means one has to understand what really works and what “better” means. Leftists and environmentalists don’t understand any of that. They think in terms of “feelings” rather than concrete results.
albertalad says:
December 27, 2013 at 12:23 pm
It’s the EU – they’re flat broke, borrowing from Germany, their windmill craze dumped tens of thousands on the unemployment lines, and the EU still doesn’t get the message – you’re flat broke! Period!
___________________________
I think you missed a couple of points there, albertalad.
The EU;
You’re flat broke! Period!
You are morally and ethically bankrupt;
You are smug, weak, self centred, impotent and politically impoverished.
You have become the ugly sister of democracy and good government.
Food for thought.
The idios has discovered that raising consumption taxes and lowering taxes on labour makes labour cheaper? Way to go.
“… we are just guaranteeing that the necessary money would be collected …”
A very telling phrase. They want our money, nothing more, nothing less.
Wow! Soon they will be taxed for breathing, plus a CO2 penalty for exhaling!
Eclectikus says:
December 27, 2013 at 1:57 pm
““their gigantic wind/solar projects have devastated their competitiveness and helped destroy their industrial sector.” Not exactly, the Spanish industry was destroyed during the 80s and 90s of last century. ”
you couldn’t even compete while devaluing the peseta?
But for two things. Humans are loath to being told how to live. And more important, if it works the well will run dry, then what will be taxed as “pollution”? I hate to list them for fear of triggering memories from WWII.
chris y says:
December 27, 2013 at 1:06 pm
“The proposal relies on this assumption- “A lower income tax would thus reduce informality”
In the real world, I think this assumption is BS.
The informal economy would thrive even if income taxes were reduced to zero, because the informal economy exists for many other reasons”
The informal economy always has the problem that it cannot openly seek customers and runs the risk of police raids. So when legal activity is no longer as disadvantaged by taxes as it is now some of the informal activities will become legal ones, the equilibrium shifts. Not all of it but some. The idios has that right.
The informal economy is the black market or the underground economy. The reason bureaucrats are concerned is because the underground economy represents over half the economic activity in the world according to one article I read. As taxes and regulations increase the underground economy grows.
One might even say the underground economy is the way disgruntled citizens give the politicians a vote of no confidence. (I am being polite) If politicians had their head screwed on correctly they would realize a large underground economy is the SYMPTIOM of a very sick country. New tax schemes are the LAST thing politicians should be looking at. Instead they should be taking a good hard look at the direction their country has been heading in and start cutting bureaucracy, repealing laws and cutting taxes because a large underground economy means you got a really bad system of government.
“The best laid schemes of mice and men…”
The problem is the “men” part. Most people in a position to make and implement those schemes have less scruples than you.
SAMURAI says: @ December 27, 2013 at 1:05 pm
….Statists will destroy the world economy with their foolishness.
>>>>>>>>>>>>>>>>>>>>>>>
Unfortunately that is their plan. As the Fabian window now installed at the London School of Economics states across the top.
Beneath the line “Remould it nearer to the heart’s desire”, the mural depicts Shaw and Webb striking the earth with hammers.
LSE is the school who has trained people like David Rockefeller, George Soros, John F. Kennedy and other world leaders.
DirkH (December 27, 2013 at 3:29 pm):
Several devaluations of Peseta were done many times, but for a country as Spain after forty years of dictatorship, with almost no oil, few and expensive coal deposits, with agriculture being controlled (and reduced) by the EU, few technological patents (or none), and an economy dependent largely on tourism… it wasn’t enough. And thirty years of social democracy, nuclear outage, chronic environmentalism, and some extra internal problems (basically nationalism and terrorism) didn’t help.
So studies like this, excreted directly from public institutions, are more a consequence than a symptom of the problem.
New Tax Scheme: Where have we heard that before?
http://fullcomment.nationalpost.com/2013/12/27/mark-milke-the-very-first-tax/
Great excerpt Gail Combs.
Government(s) that can classify CO2 (plant food) as a pollutant under bogus pretenses can in turn classify anything else as pollutants. I predict H2O vapor and CH4 similarly classified in the not so distant future.
The other thing that happened after the Crash of 2008 here in the US at least is a massive wave of new rules, regulations and other speed bumps to progress. It is not just the taxes that drive everyone underground, it is the rules, regs and fundamental lawlessness / corruption of the above ground economy.
Jack Anderson wrote in 1989 that fully 15% of the GDP of the old Soviet Union was black market when it fell. Some speculate it was much higher than that.
http://news.google.com/newspapers?nid=1891&dat=19891001&id=OWgfAAAAIBAJ&sjid=59QEAAAAIBAJ&pg=4271,298886
What these clowns don’t understand is that the more intrusive they get, the larger they grow the underground economy. Or worse, perhaps they understand precisely so as to turn us all into criminals so we are easier to govern. Cheers –
Are we “fundamentally restructured” yet? Apparently so.
“R. de Haan says:
December 27, 2013 at 12:35 pm
Zeke says:
December 27, 2013 at 12:05 pm “When anyone refers to the informal economy, I believe this is a way of talking about the private wealth in a country”.
No it isn’t. It is the underground economy, the money made with illegal activities and all work.performed without paying taxes. Black money. In this case the informal economy (ending the informal economy) is used as an argument to get this legislation introduced.”
Thank you for your correction, R. deHaan, which I believe could be absolutely correct. However, the “informal economy” is not defined in anything I was able to access. This phrase may have a lot of degrees of freedom in it. For example, it could mean the economy which is based on sales on the world wide web, such as ebay. Or it may even be applied to selling eggs or milk, or having a garage sale, or buying things in second hand stores. The “informal economy” is not defined, and to my reading of the available excerpts it is regulated on this basis: “Environmental taxes manage to get consumers and companies to pay for the damage sustained by society as a result of pollution. What is more, they can be very effective in some cases because they can succeed in bringing about changes in our habits or behaviour and thus lower pollution…”
I do not see this as reflecting a restricted definition for “informal economy.” I see it as all encompassing. That is why I ventured, “I do not think it precludes the idea that this is a tax on all wealth, any assets in existence and any transaction.” If there is a definition of “informal economy” in the article, and someone can see the correct graphs or read the paper, then that would help with terms.
The “experts” shy away from seeking the causes for the “informal economy”. The primary cause is that people NEED defensible income, money that they KNOW belongs to them, to do with as they please. If tax systems allowed even a small amount of defensible income there would be no informal economy. The notion of defensible income derives from defensible space, a major factor in public housing, explaining the failure of projects that do not provide it.
Any study that purports to understand the informal, or black economy, with no reference to its cause is a total crock, as is this study.
Eclectikus says:
December 27, 2013 at 3:55 pm
“And thirty years of social democracy,”
Oh. Okay, that should do any economy in.
The ‘nice’ thing about taxing externals is that you can completely make up both the amount of the externals AND the tax rate. On paper, Obama just raised the economic cost of CO2 to make the cost of green energy seem more reasonable. Reality no longer has to interfere with the left’s imaginary circumstances.
Apparently the “informal economy” is where wealth is being generated.
Spain’s problems could be eliminated by encouraging the “informal economy” to grow unfettered.
Of course, governmental control freaks, including these authors, would have to join it and actually produce something.
Aye, there’s the rub!
Work against Nature’s Law and you become Nature’s enemy. You’d think these “smart people” could understand this obvious dictum.
So our US Fed is cutting its QE3 bond buying by $10b in January. At $75b instead of $85b we’re still talking about close to a trillion dollars a year in stimulus. Soft stimulus that mostly ends up as entries on a bank balance sheet.
Instead, had our government been spending 1 trillion dollars a year on infrastructure projects we would have a booming economy like China by now.
Booming like China? Be careful what you ask for, you might get it. Giving pure quill crony capitalism another shot at global domination.
If western governments simply practiced honest fiscal reform, they wouldn’t have to dream up smoke and mirrors tax raising ploys with grandiose BS names like “environmental fiscal reform”.
Ed- with all due respect, the Keynesian economic models don’t work long term.
Long-term economic growth is not magically created by wasteful debt-financed public works projects, implementing insane monetary policies (that create stock/real estate bubbles and devalue the currency), rapidly increasing the welfare ranks, etc.
Sure, governments can borrow, tax, print and spend money to make the GDP line go up in the short term, but that only comes at the price of decreased personal savings, decreased personal consumption in the future, devalued currency, popping stock/real estate bubbles, decreased private sector investment, inefficient use of land/labor capital, etc.
Keynesians would be well served by reading Basitat’s Broken Window Fallacy to understand the concept of unintended consequences of wasteful and excessive government spending and destructive monetary policies.
Sustainable long-term economic growth can only be achieved by allowing free markets to efficiently and effectively allocate the use of land/labor/capital. Total state and municipal spending should never be more than 10~15% of GDP and should only be used to provide essential public services such as defense, infrastructure, mail delivery, police/fire departments, provide local public schools, managing public land, coining money, protecting the border, running the courts and implementing and essential and minimal laws and regulations, collecting taxes, issuing patents and that’s about it.
To perform all these functions should cost no more than 10-15% of GDP. The more money that’s kept in the private sector and not wasted by the government, the more money that’s available in the private sector to expand business, develop new technologies, build new factories, hire new employees, increase exports, expand production, etc.
Fact-checking shows:
In September 1935, he [JFK] made his first trip abroad, with his parents and sister Kathleen, to London, with the intent of studying under Harold Laski at the London School of Economics (LSE), as his older brother Joe had done. Ill-health forced his return to America in October 1935, when he enrolled late and spent six weeks at Princeton University.
.
Ever been to an open-air flea market Zeke? You know, at least here in those states with a sales tax, any sale should include said sales tax … but, more often than not, it isn’t. THAT is the informal economy (no paperwork, no records, and NO sales tax.)
‘Informal’ would also include ‘sales’ made over the back fence, out of the trunk of a car, late at night to ‘friends’ at a party, over lunch at Arbys … making sense yet?
.
@_Jim
Readers Digest version just for you: show me the definition of the term “informal economy” in the infernal paper, and then we will know.
SAMURAI, with all due respect also, long term economic growth follows good infrastructure because companies seek to locate there.
Since Nixon flew to China and since Reagan persued the monetary policies you espouse we are drifting towards becoming a third world colony of the People’s Republic. We get to raise their pigs and they get to pollute our land and food with arsenic. And homelessness has become commonplace.
http://nypost.com/2013/12/15/why-are-we-letting-china-buy-american-companies/
http://www.straightdope.com/columns/read/3139/does-pig-excrement-kill
Anyway, I see markets and the economy going down before long. Bond interest rates are climbing. Republicans cut unemployment benefits to 1.3 million laid off workers so they won’t be spending any money. These people were once fully employed at one time or they wouldn’t be eligible for benefits. A lot of these people live way outside the cities, the saw mills, rural stores and businesses are shuttered. The unemployed aren’t ‘deadbeats’, and for so many it’s just that their jobs were sent to China.
Add in cuts to SNAP food benefits which also harm the economy in dollars lost and in general morale of a big swath of the population. People now find it much more difficult to even look for work, let alone find a job because these cruel cuts also reduce the numbers of jobs available when you weaken the economy.
Even the elderly have a negative impact on the economy when they fear they will run out of money because of the constant talk from Conservatives that cuts to their entitlement programs are inevitable. They are told that nonsense that Social Security and Medicare will go broke and the theft of their pensions was Obama’s fault.
It sure looks like sabotage.
There’s an even better `tax system: get rid of income taxes, sales taxes, energy taxes etc and charge people for their use of the land, a Resource Rental. Henry George got it right.
California did it up to 1978 and was the `Sunshine State.’ Now, business is emigrating. Michigan did it up until 1995 and General Motors collapsed in 2008, Chicago suburbs have been ploughed up and industry is emigrating.
Those nations still running on this form of government revenue continue to go from strength to strength: Taiwan, and Hong Kong.
Don’t kid yourself – the informal economy is the free market. It is rowdy, unkempt, beyond regulation, and functionally perfect. It is the correct way people with a pocket full of wealth can deal with people with shelves full of goods. It was never meant for those with empty pockets.
Gail Combs says:
December 27, 2013 at 3:34 pm
The informal economy is the black market or the underground economy.
…
One might even say the underground economy is the way disgruntled citizens give the politicians a
vote of no confidence. (I am being polite) If politicians had their head screwed on correctly they would realize a large underground economy is the SYMPTIOM of a very sick country. New tax schemes are the LAST thing politicians should be looking at. Instead they should be taking a good hard look at the direction their country has been heading in and start cutting bureaucracy, repealing laws and cutting taxes because a large underground economy means you got a really bad system of government.
==========================================================
I have some sympathy for that point of view. Perhaps it’s more because of the recognition that
TAXES on an economy are bad in any shape or form. When much economic activity actively
DODGES, AVOIDS and EVADES the tax system, then the system should be changed.
Thus a very large underground economy is the sympton of a BAD (and unfair) TAX SYSTEM.
Governments still need to fund the services we, their citizens, demand they provide. But taxes
which fall on economic activity are crazy: they reduce that activity.
Henry George suggested a viable alternative at the end of the nineteenth Century.
if the tax systems around the world were changed to that advocated by George, there would be no need whatsoever for all these proposed extra taxes.
BTW, all George’s books are still in print and available to read on line. They are very good reading.
Take an example of an informal market on the internet – craigslist. We buy furniture there when we need it. Tell me how you regulate or tax that? Do you cause all people to register everything they own and pay a tax on it, in case they resell it? Or do you pass a law saying that since goods “might be stolen,” that no one can sell used items?
Look, this paper is diabolical from first to last. Because carbon tax raises prices on everything, as was observed in Australia, there is suggested a bribe to provide a higher wage. Here in my state, one of our counties may be voting to raise the minimum wage to $15/hr. This would shut down businesses and raise prices. But will the electorate understand that? I think this is probably a test run to see how to market raising wages. Within a short time, production would be destroyed and your higher wages would have no purchasing power anyway. So this is the tax scheme from Hell.
Ed– I agree the imminent worldwide economic collapse/or severe depression from decades of government wasteful spending/massive debt accumulation/money printing will most likely start in the bond market with increasing bond yields forcing massive defaults of Treasury and municipal bonds.
The increasing bond yields will then lead to increased mortgage rates, which will pop the real estate bubble, leading to another banking sector crisis, which will then preclude a pop of the stock market bubble.
The US industrial sector has been destroyed by $100’s of billions/yr in compliance costs of unnecessary rules, regulations and mandates, excessive corporate taxes, union extortion, absurd labor laws, minimum wage regulations, OSHA standards, etc.
SNAP/welfare/disability/Medicaid-care compensation, etc., are being severely “abused” by too many people taking the perfectly logical option of living on the dole; I don’t blame people for taking advantage of the welfare system, I blame the government for setting up such economically/socially destructive policies.
People would be much better off if we did away with Medicaid/care and Social Security and people became responsible for their own retirement and healthcare costs. Prior to Medicaid/care medical costs were just 5% of GDP, now they are almost 20%…..
The US already has about $125 TRILLION in SS and Medicaid/care unfunded liabilities, which means young people currently paying into these Ponzi Schemes will never see any of this money.
If people were responsible for their own retirement, medical care and hard times, they would be forced to save more, buy cheap private sector health insurance which would add $trillions to bank/insurance company capital reserves, which would in turn provide $trillions of low interest funds available for private sector capital investment/business expansion.
The era of big government/massive national debts/ massive budget deficits is over. Keynesian economics, like CAGW, doesn’t work; it’s all illusory.
The imminent collapse/severe depression will either lead to small limited governments or tyranny…
It’ll be interesting to see how it plays out, however, history shows an era of awful tyranny is the most likely scenario of economic collapse….
We’ll see soon enough….
The “informal economy” is a strong indicator of both bureaucratic burden and overbearing tax levels on wealth creators (people actually adding to the GDP as opposed to spending it). Whenever governments raise taxes (directly or indirectly) or add new layers of declaratory paperwork, the informal economies grow. They are an immediate sign that people stop believing that their tax money is spent in a responsible and frugal manner and they’d rather risk criminal penalties than give any more to the government than they cannot hide from it.
agimarc says: @ December 27, 2013 at 4:54 pm
“Jack Anderson wrote in 1989 that fully 15% of the GDP of the old Soviet Union was black market when it fell. Some speculate it was much higher than that. “
>>>>>>>>>>>>>>>>>>>>>>>>
They estimate the US underground economy is $2 Trillion dollars or nearly 8% of gross domestic product. link
………….
agimarc says:
“What these clowns don’t understand is that the more intrusive they get, the larger they grow the underground economy. Or worse, perhaps they understand precisely so as to turn us all into criminals so we are easier to govern. Cheers -“
>>>>>>>>>>>>>>>>>>>>>>>>
They do not need the underground economy to do that.
The problems not mentioned in this article is the removal of the jury trial and even when there are trials by jury, the jurors are not aware they can nullify a law but think they have to follow the dictates of the judge. SEE: What lawyers & judges won’t tell you about juries (An eye opening read)
Here is how the politicians have gotten around the US Constitution to make sure citizens are denied their right to a trial:
So there went our last constraint on the government. Without a trial by jury we lost our RIGHT to overrule idiotic laws and regulations.
Zeke says: December 27, 2013 at 5:11 pm
You need to use the phrase “informal economy” (with the quotation marks) to do a search.
This is what I found: as first up
WIKI
The Business Dictionary.com defines it as:
Nik says: @ December 27, 2013 at 5:27 pm
defensible income…. defensible space….
>>>>>>>>>>>>>>>>>
Are those the new politically correct terms for Property Rights in the Post Modern Society?
One does get sick and tired of the constant changes in vocabulary used to hide less than honest motives.
Ed Mertin says:
December 27, 2013 at 6:34 pm
So our US Fed is cutting its QE3 bond buying by $10b in January. At $75b instead of $85b we’re still talking about close to a trillion dollars a year in stimulus. Soft stimulus that mostly ends up as entries on a bank balance sheet.
Instead, had our government been spending 1 trillion dollars a year on infrastructure projects we would have a booming economy like China by now.
>>>>>>>>>>>>>>>>>>>>>>
It is still money taken out of the tax payers pocket.
If you want to stimulate the economy just Get the He!! Out of The Way! All legislatures have to do is spend a couple years repealing idiotic laws instead of passing them.
Many people operate in the shadow economy because they just give-up trying to get through the masses of red tape and hard heads of bureaucrats.
Here is a personal example:
1. I checked with the town to see if I was allowed horses on the property I wished to buy. – They said yes and gave me a copy of the zoning code.
2. I put a hefty down payment on a professional horse barn and went to get the permits.
3. I was told I needed professionally stamped architectural drawings. I got them but they were from out of state so did not qualify.
4. I had a friend who was an in-state architect stamp them. I was then told I needed two hour burn through to the hay loft (there wasn’t one) and the building had to be concrete. (A real no-no with horses)
5. I gave up and had a friend pull a permit for a type-2 shed (approved for use with animals) built it myself and after inspection moved in my horses.
6. I then had monthly ‘Complaints’ that required hassles by the town for the rest of the time I lived there. (Had to pick-up and dispose of all manure in pasture, treat all urine spots with caustic lime, manure had to be in covered containers, had to have electric fence charger certified…) I gave-up and moved to North Carolina not far from a pig farm.
Jim says: @ December 27, 2013 at 9:19 pm
Gail Combs says December 27, 2013 at 3:49 pm
…
LSE is the school who has trained people like … John F. Kennedy and other world leaders.
Fact-checking shows:
In September 1935, he [JFK]…
>>>>>>>>>>>>>>>>>>>>>>>>>
Jim you might want to correct the WIKI entry then:
And also RANKER’s Famous London School Of Economics Alumni
Short form:
Socialists wealth redistribution via carbon and other related taxes keeping the totalitarianists in control and reducing freedom to just a term in the dictionary.
Isn’t there a logical fallacy in the entire premise? Let us assume that AGW is correct, and its necessary to de-fossil fuel the economy. Transferring taxes to fossil fuels from other things (capital & labour) does make sense, in order to restructure the economy towards a labour intensive, capital unintensive model (peasant farming essentially). But. The logical conclusion is that if green taxes are successful, and the economy decarbonises itself, the yield from the green taxes will tend to fall. Presumably eventually to zero, if fossil fuels were totally eliminated from the economy (I know that isn’t going to happen, but go with me here). So at that point, what do governments tax? You can’t tax labour again, because you’ve just arranged your entire economy around people doing work, not machines. Ditto capital, because there won’t be much of that either.
The logical conclusion of green taxes is that they want fossil fuels to continue to be used, so they can be taxed, and the population can be forced to pay ‘penance’ for the ‘sin’ of using them. If they stop using them, you can’t tax them, and if you can’t tax them, you can’t control them any more either, and that would never do!
sophocles says: @ December 28, 2013 at 12:34 am
>>>>>>>>>>>>>
The underground economy is to my mind more a symptom of too complex a system of business regulations and taxes. Even with the help of a lawyer and an accountant you are walking in a mind field if you try to open a business in the USA. One that is libel to blow-up in your face. You are a heck of a lot safer stealing cars than being a farmer or a doctor.
Car theft is 2 months probation even if you have a previous record. (Talk with District attorney on why they would not bother prosecuting my car-theft case. This were federal guidelines shown to me.)
For example:
There is also civil asset forfeiture laws where assets can be taken without trial or even charges being pressed. …civil asset forfeiture laws allow the government to seize property without charging anyone with a crime….
If you wish to read through the legalize: Selected Civil Asset Forefeiture Statutes
In many cases the assets are seized and then YOU are left trying to prove the government was wrong.
From http://www.businessdictionary.com: “Green tax: a tax paid by consumers for products or services that are not environmentally friendly. Intended purpose of the green tax is to offset the negative impact resulting from the use of non-green products and services”.
This is a classic indirect tax, imposed on suppliers of “products or services that are not environmentally friendly”, but actually paid by customers through price increases made by all suppliers else they would become unprofitable and go out of business. Examples of indirect taxes include Sales Tax, Value Added Tax (in the UK and EU), UK Business Rates and Excise Duties on alcohol, tobacco and gaming, and Air Passenger Duty. The key is that the ordinary consumer effectively has no choice but to pay increased price caused by the tax while the tax is actually paid at source by the supplier.
Direct taxes – direct levies on the property, income or wealth of individuals or corporates – are the opposite to this: the individual or corporation is liable for the tax by means of some governmental assessment and enforcement (leaving aside “hybrids” such as PAYE on income from employment, actually levied on employers in the UK).
It is a commonplace that indirect taxes are less liable to avoidance than direct taxes – essentially because evasion of direct taxes involves just one person (the taxpayer) rather than two (the supplier and effective taxpayer).
So what (the abstract) to this new paper is actually saying is that changing taxation emphasis from direct (income taxes) to indirect (sales and green taxes) will (a) increase governmental revenues and (b) (by lowering income tax rates) help to reduce the “black economy” – income tax evasion and fraud.
This effect has been obvious since Income Tax was first introduced during the Napoleonic Wars. Nothing new here …
TimC says: @ December 28, 2013 at 7:07 am
No it is not new. It is a method of changing behavior or so they think.
It has really worked well on cigarettes and booze hasn’t it? However while the individual has the option of not buying and using cigarettes and booze and thereby avoiding the tax, they do not have any way of avoiding a ‘Green Tax’ on the energy they need to cook and warm their home, the fuel to get to work or even the fuel used to grow and distribute food. Although at this point you can get off road diesel for your tractor that does not have a fuel tax you still pay tax on the transportation of that food to get it to market and on the transportation to get that diesel to the pump.
What they propose is a green tax but what would be imposed is a consumption tax (of energy). This is already happening to some extent as we subsidize the “green” economy. Our hydro rates go up in the name of wind turbines and solar panels but the amount of electricity use remains the same or increases, leading to greater revenue for the utility company.
Speaking of which, I was 6 days without electricity after the recent ice storm here in rural Ontario. The hydro company hasn’t trimmed the trees under the lines since I’ve lived here (going on 10 years) and it was a mammoth task to do so in a week (much of which could have been avoided with regular trimming). This leads me to observe that the hydro company can increase rates to pay for goodies but won’t invest in basic preventive maintenance. Now I’m wondering who will pay that massive bill?
Yay! Income tax cut, with revenue neutral carbon tax on petrol and electricity? What’s not to like? It’s incredibly regressive – a gigantic tax cut for me and a devastating blow to the poor who don’t currently pay any net income tax. (And yes, it’s harder to evade tax on consumption than on income.)
Oh yeah right, the poor people. I knew there was a flaw. But interesting to see the push coming from the “progressives” who seem to think they’re better than the rest of us most of the time.
Gail Combs said: “No it is not new. It is a method of changing behavior or so they think.”
Thanks: totally agreed. An added “nasty” is that indirect taxes on consumption are generally blind to the circumstances of the customer/consumer, so are much more regressive than direct taxes.
As one example, the UK charges levied on electricity suppliers to subsidise wind turbines are rapidly becoming a national scandal here – or so now says our Opposition Leader who (when he was in office as Decc Secretary in the last UK government) was responsible for getting our Climate Change Act (potentially the most costly legislation ever) passed! What a difference a day makes in politics …
Yes, that is the definition of the “informal economy,” and I have applied that in several of my posts by using specific examples such as ebay, garage sales, and craigslist. But I am asking what the definition of the term is in the paper; and furthermore, I am asking how that could possibly be applied or enforced. It is impossible to tax the local resale of items of items you own, unless all wealth, possessions, and assets were brought under the definition of “informal economy.”
Taxes (including fees, which are nothing more than and nothing less than a tax) increase the price of goods. Governments do not consider this to be bad. To be a worthwhile tax, you want as many people “paying” for them as you can muster. That means that whatever tax you impose, you want the necessities of life (things that everybody buys -like tea for instance) to reflect that tax. This is the beauty of a carbon tax. There is an endless supply of things you can drum up to tax when people grumble about any one of them.
So go ahead King Guvmnt. Tax tea. I dare you.
Zeke says:
December 27, 2013 at 5:11 pm
“R. de Haan says:
December 27, 2013 at 12:35 pm
Zeke says:
December 27, 2013 at 12:05 pm “When anyone refers to the informal economy, I believe this is a way of talking about the private wealth in a country”.
No it isn’t. It is the underground economy, the money made with illegal activities and all work.performed without paying taxes. Black money. In this case the informal economy (ending the informal economy) is used as an argument to get this legislation introduced.”
Thank you for your correction, R. deHaan, which I believe could be absolutely correct. However, the “informal economy” is not defined in anything I was able to access. This phrase may have a lot of degrees of freedom in it. For example, it could mean the economy which is based on sales on the world wide web, such as ebay. Or it may even be applied to selling eggs or milk, or having a garage sale, or buying things in second hand stores. The “informal economy” is not defined, and to my reading of the available excerpts it is regulated on this basis: “Environmental taxes manage to get consumers and companies to pay for the damage sustained by society as a result of pollution. What is more, they can be very effective in some cases because they can succeed in bringing about changes in our habits or behaviour and thus lower pollution…”
I do not see this as reflecting a restricted definition for “informal economy.” I see it as all encompassing. That is why I ventured, “I do not think it precludes the idea that this is a tax on all wealth, any assets in existence and any transaction.” If there is a definition of “informal economy” in the article, and someone can see the correct graphs or read the paper, then that would help with terms.”
Zeke, the so called informal economy is nothing more but a description of all ecomic activity that is not controlled or taxed by the Government. The scale and type of informal economic activity differs from country to country and from region to region.
I personally think they have used the argument of reducing the “informal economy” to sell their tax scheme. Nothing more, nothing less.
Governments underestimate the creativity of people to bend the rules if they make their life too complicated.
As I wrote before I think this environmental tax bill is an absolute killer tax on the economy, formal or informal and is aimed to eradicate any economic activity.
If we don’t oppose this tax scheme and the CO2 taxes we’re finished.
I regard a tax like this as a declaration of war on humanity and be better stop it in it’s track.
http://green-agenda.com
SAMURAI, please explain how young people will never see any SS and Medicaid/care money? They have their own revenue streams. Worst case benefits drop by 20% for a few years.
Status of the Social Security and Medicaid Programs
http://www.ssa.gov/oact/TRSUM/tr13summary.pdf
Medicare will have insufficient reserves to pay full benefits in 2026 and Social Security will have insufficient reserves beginning in 2033.
Where does your $125 Trillion unfunded liabilities figure come from? Godlike Productions or the conservative confusing noise machine?
When people are working, wages drive an economy and the revenue stream increases. Keynsian economics give a shot at long term economic growth but, of course, there has to be good trade, manufacturing, education, energy, farm and financial policies to sustain it. That is how our politicians lost it in the last 30 years. If the ultra rich are no longer allowed to dodge taxes and the offshore & corporate tax evasion is addressed your pocket doesn’t have to be picked, Gail. Building up an economy will produce revenue to pay it back because 20 million more people will be working, weakening it never will.
Ed, here are some examples of liberal thinking: Explain how spending all of my disposable income on medical insurance will grow an economy. I won’t be buying anything but insurance this next year with money I used to spend on say, a new washing machine. Or explain how spending lots more money on electricity will grow an economy. I won’t be buying anything but electricity to run my old washing machine and I won’t be going to the doctor to buy medicine this next year. I won’t be buying lots of things next year. And neither will the people who live on my street, and the next street, and the next. Do you think the economy grows on trees?
R De Haan says, “As I wrote before I think this environmental tax bill is an absolute killer tax on the economy, formal or informal and is aimed to eradicate any economic activity.”
I agree. They ought to be ashamed of themselves. (:
But look at this dark and devilish scheme to sell this to the young and inexperienced:
“the associated rise in energy prices could be counteracted by the increase in real wages…”
As I said, there is an item on the ballot in one of our counties to raise the min. wage to $15/hr. What would that do to small businesses, services, and production? What the devil will you have to spend your money on then?! This is predatory progressivism.
Here is the new liberal thinking: To grow an economy, you must weaken it first. You must tax and increase prices in the short term in order to improve the economy in the long term.
Just exactly how does that work? And if you have bought this load of horse manure, you must believe in Santa too.
The Supreme Court is undermining science and society: http://factsnotfantasy.blogspot.com/2013/12/the-supreme-court-is-underming-science.html
Explain how you’d not lose a lot with no or poor insurance? Pam, I never proclaimed to be in favor of higher electricity. I would like go Liberal like it was back in its’ roots, not like the oligarch hijacked liberals we have today. The right are nothing but intermediaries for their greedy oligarchs.
Mr Deregulation, Phil Gramm is a perfect example of that. Rolled Glass-Steagall and inserted CFMA in 2000. Wow, that was/is a disaster.
http://www.independent.co.uk/news/world/politics/the-real-hunger-games-how-banks-gamble-on-food-prices–and-the-poor-lose-out-7606263.html
Gotta go, tons of chores… happy new year
TimC says: @ December 28, 2013 at 9:36 am
…An added “nasty” is that indirect taxes on consumption are generally blind to the circumstances of the customer/consumer, so are much more regressive than direct taxes….
>>>>>>>>>>>>>>>>>>
The idea of a Progressive tax and a Tax on the Rich has always been just a politician’s excuse. For income tax WAGE earners pay the big tax not the ‘idle rich’ Also as Reagan pointed out in 1975
If everyone had to fork over their entire tax burden on April 14th, there would be a revolution on April 15th. That is why taxes are taken out BEFORE we ever see our wages and why there are so many hidden taxes. I once added up the taxes I could ferret out that I paid, income. state, fed, property, sales, gasoline… It was 64.5% of my income and that didn’t include the 151 taxes on a loaf of bread!
If my health stays the same (same chonic conditions, same number of colds and infections, same doctor visits, same wellcare check ups, etc) and I get health insurance for the coming year, my choices this next year compared to what I had last year will take all of my discretionary income to fund. I will have co-pays, a higher monthly premium, and an outrageous out of pocket deductible. Kiss my spending money goodby. Every extra cent I have will now go for medical expenses. If carbon taxes get piled on, I am talking food budget cuts. And that is better than what conservatives have to offer? How?????
As a matter of fact, I will probably not buy health insurance this next year, opting for the penalty instead. My rent is going up so my spending money is needed to keep the roof over my head. There are many more just like me. The universal coverage gamble will sink the party, for a long time to come.
Zeke says: @ December 27, 2013 at 5:11 pm
….Thank you for your correction, R. deHaan, which I believe could be absolutely correct. However, the “informal economy” is not defined in anything I was able to access. This phrase may have a lot of degrees of freedom in it. For example, it could mean the economy which is based on sales on the world wide web, such as ebay. Or it may even be applied to selling eggs or milk, or having a garage sale, or buying things in second hand stores….
>>>>>>>>>>>>>>>>
The second hand stores apply sales tax. Flea markets however mostly do not. I know this having been through several raids by the Revenuers on my favorite flea market a few years ago because someone wanted to buy the land. Most at the market did not have sales tax numbers/forms.
So all those are indeed black market although most people do not even think about it. Amazon will not deal in North Carolina because of the issue of NC sales tax.
If ANY economic activity happens including such things as the sale of used items or the barter of my chicken eggs for your veggies or my lawn mowing for your helping babysitting, the government wants their slice of the action.
Since modern civilization runs on energy (generally fossil fuel) governments have decided to tax the source of all economic activity via ENERGY.
To say “Environmental fiscal reform would improve the environment and reduce the informal economy” is an outright lie since the actual effect will be to encourage more of the informal economy such as the sale of fire wood out of the back of pick-up trucks or off people’s front lawns not to mention midnight raids on the local state and federal forests à la Greece and Germany. and wreck havoc on the environment. Only the relatively rich (us) give a darn about the environment. Most people are too concerned about where their next meal is coming from or where their next fix is coming from. (addiction affects 23.2 million Americans… one in 10 Americans over the age of 12..)
You really have to wonder if the people who write this sort of nonsense ever got out of Mommy’s basement.
The bureaus must always grow, stasis is death of career.
Power is addictive .
Democracy without informed and involved citizens rapidly becomes Kleptocracy.
Are we there yet?
The informal economy is the real economy, that which cannot be measured, controlled and looted by the parasites.
Every expansion of government degrades and constricts economic activity.
We live in interesting times, the voluntarily non-productive now seem to be certain that they can replace productive activities thro the agency of bureaucracies.
That will work out well, just like it has in every similar example our history can provide.
If the major part of the return on my labour is to be taken by force and given to nonproductive activities, what incentive do you propose to keep me labouring on?
The old; The abuse will continue until moral improves?
It would not suprise me at all if this was dreamed up by Basque separatists. If Spain implemented this hare brained plan with great dilligence, the Basques and the Catalans would be the only ones left standing after a rebellion, since they are the largest above the counter economies.
Quote “get consumers and companies to pay for the damage sustained by society as a result of pollution”.
And just how do you estimate, let alone prove “damage sustained by society”, and prove that it was “as a result of pollution” ?
How do you put a value figure on that?
otsar says: @ December 28, 2013 at 12:11 pm
It would not suprise me at all if this was dreamed up by Basque separatists….
>>>>>>>>>>>>>>>>
That idea sort of crossed my mind when I first saw the word Basque at the head of the story. This is based on my one and only three week stay in their area. Their dislike of the French and everyone else was rather obvious.
25% real unemployment in the US – and there’s still room to debate about the environment?
amazing…
pete says: @ December 28, 2013 at 2:29 pm
Why do you think there is such a big underground economy?
CNBC: $2 Trillion Underground Economy May Be Recovery’s Savior – The growing underground economy may be helping to prevent the real economy from sinking further, according to analysts. (Who’d a thunk!)
Some think you should double that number since it is an ‘Official’ number and probably as believable as the ‘Official’ Unemployment stats. SEE: $2 Trillion US Underground Economy Is the Free Market Striking Back?
Since the ‘Official’ GDP includes all the salaries paid to government employees (another 10% or more) you can see where the government(s) might just be panicking about all those economic transactions they are not collecting taxes on. Kind of tough when less than 1/2 the adults are producing wealth that you can get your grubby mitts on. (Baby Boomer’s forced into retirement and all that.)
This old report gives a bit of perspective:
OK, back, ran two tanks of gas through the Stihl brush cutter and dinner… Pamela says, “And that is better than what conservatives have to offer? How?????”
That’s funny and sad at the same time, Pam, because the conservatives were the ones inventing and championing the darn thing in the first place. You could be ranting about Dolecare or Newtcare. Mittcare would have been different?
That dumbass amateur SpaghettiO, I mean, wattnthe’ell made him (with 47 million Republicans breathing down his neck) try to give flying monkeys what they invented & wanted & not paying attention to properly prepare the website launch?
See…
http://www.forbes.com/sites/theapothecary/2012/02/07/the-tortuous-conservative-history-of-the-individual-mandate/
http://www.newrepublic.com/article/politics/magazine/98554/individual-mandate-affordable-care-act?page=0,0
…
THE INDIVIDUAL MANDATE was not always embraced by liberals. Indeed, the idea originated on the right. In 1989, Stuart Butler of the Heritage Foundation proposed an individual mandate as part of a plan for “assuring affordable health care for all Americans”; two years later, the economist Mark Pauly put forward the idea as part of another health care proposal. Those plans in turn formed the basis of a bill introduced in 1993 by Republican Senator John Chafee of Rhode Island and co-sponsored by then-GOP Minority Leader Bob Dole. At the time, the media often characterized the individual mandate as the conservative alternative to the Democrats’ proposed mandate on employers to pay for a share of health insurance. The Republican proposal was thought to represent a more individualistic, market-friendly approach…