Prof. Dr. Jürgen G. Backhaus
Universiteit Maastricht
Vakgroep Algemene Economie
Postbus 616
6200 MD Maastricht
Nederland
tel: +31-43-3883652/3636
fax: +31-43-3258440
email: f.schijlen@algec.unimaas.nl
The Law and Economics of Environmental Taxation: When Should the Ecotax Kick In?1
Ecological taxes are categorically different from the classical taxes which seek to extract a certain revenue at a minimum excess burden. Classical taxes are levied so as to interfere with the market based allocation of recourses as little as possible. Ecological taxes, on the other hand, are designed to achieve a well defined ecological effect again at a minimum of excess burdens. The revenue of an ecological tax, however, is coincidental and nil when the tax is ecologically optimal. Most ecological taxes currently proposed are not ecologically optimal as defined here. In generating revenues they partly miss the ecological objective. The tax revenue is an indication that the ecologically relevant decisions of some agents in the jurisdiction have not been affected so as to achieve the desired ecological result.
This paper explores the law and economics of ecological taxation from this point of view. The question is: how can an optimal ecological tax be institutionally structured so as to have a maximum impact on ecologically relevant decisions in the desired scope and direction? The paper systematically explores and applies James M. Buchanan's Cost and Choice: An Inquiry in Economic Theory (Chicago: Markham, 1969) to this question and derives an innovative institutional solution.
Key words: choice influencing taxes, ecological taxation, environmental taxation, opportunity cost, global warming, carbon fuel consumption, regulatory decisions under uncertainty.
J.E.L. codes: H21, K34, Q28, 38
The Law and Economics of Environmental Taxation: When Should the Ecotax Kick In?
In this essay, it is being argued that environmental taxes are fundamentally different from traditional taxes. They are not primarily designed to be revenue raising instruments, nor are they regulatory taxes in the sense of accomplishing slight changes in individual or firm behaviour. The point of environmental taxation and of designing an environmentally sound tax system is rather to accomplish deep and structural changes in the economic and ecological behaviour of individuals, households and firms, i.e. changes of patterns and not changes of degree. When these basic patterns of behaviour and processes are to be influenced, it is important to identify those basic aspects that are environmentally and ecologically important and susceptible to change as a consequence of a tax intervention. Consequently, one has to identify those instances where basic choices can be taken and where decision makers face alternatives among which they can choose.
This approach is different from the standard approach to discussing environmental taxation. The law and economics approach pursued in this essay looks at structural changes and the possibility of effecting such changes through tax instruments. The standard approach to ecological taxation is to impose regulatory taxations so as to curtail environmentally and ecologically undesirable effects and thereby even generate a double dividend consisting of on the one hand the improvement of the environment and the ecological system and on the other hand a revenue which can be used for different policy ends, such as those relating to the environment and the ecological system. Taxes which promise to generate such a double dividend are, of course, politically very attractive. It has, however, repeatedly been pointed out that the double dividend approach is basically flawed (Backhaus (1995), Schneider and Volkert (1996) ). After initial enthusiasm on the part of politicians and policy advisors, the consensus has now vanished and it has even been suggested that the double dividend be negative. (Bovenberg and de Mooij, 1994)
With so much ambiguity surrounding one of the core concepts of environmental taxation, a fresh approach may well be tried. This essay first looks at central features of the double dividend approach from a law and economics point of view. It then explores a Coasian perspective in order then to proceed to an analysis based on a rigorous application of Buchanan=s cost and choice concept. A fourth section contains a simple illustration. The essay concludes with a summary and an emphasis on unresolved issues.2
I. The Double Dividend
The case for the double dividend in specific forms of environmental taxation has for instance been made by Pearce, 1991, with an application to carbon taxes. Although many different formulations are possible, and the double dividend can be derived in different ways, the standard approach relies on a scenario where in a particular fiscal entity tax rates are high and allocative distortions are substantial to the point that governments feel an urge to reduce the excess burden without reducing public spending. If in such a scenario a tax can be levied on an environmentally damaging input such as carbon fuel, the demand for which is highly in- elastic, the excess burden of that carbon tax will be low, and the revenue can be used in order to substitute for the revenue derived from those taxes which can only be imposed with a high excess burden. The double dividend then appears on the one hand in addressing an environmental problem (an externality), in generating a substantial revenue at low cost to the economy and in consequently reducing excess burdens from taxes that meet high levels of resistence.
In order to understand the context in which the notion of the double dividend became prominent and from which policy advise has often been extracted without properly noting this context, let us quote from Pearce, (1991:938) Awho sets out those conditions. These are:
a: That if warming occurs it will impose significant damage;
b: That the damage is irreversible;
c: That the initial cost of controlling greenhouse gas emissions are low;
d: That greenhouse gas controls bring incidental or joint benefits besides the containment of global warming.@
The incidental benefits warrant closer mention. AThe two basic technological responses are
a. substitution of low carbon fuels for high carbon fuels (for instance natural gas for coal, nuclear energy, or both) and
b. energy conservation in the sense of reductions in the ratio of carbon based energy to economic activity. Both technological responses have the effect of reducing Aconventional@ air pollutants, such as nitrogine oxydes, sulfor oxydes and suspendent particulates (dust and smoke).@ (Pearce, 1991:939). The context of the debate is then adequately described like this: AThis combination of uncertainty, irreversibility, probable initial low control costs, possible very high damage costs in the absence of action, and potentially high joint benefits from control, suggest that the policy stance on global warming should be fairly aggressive@. (Pearce, 1991:939).
To understand the astonishing degree of disagreement among economists and policy makers with respect to global warming that has recently erupted3 one should appreciate the particular framing of the debate. Goulder (1994) remarks in his AReader=s Guide@: Athus the debate about the double dividend reflects the desire to be able to make safe judgements about environmental reforms in the presence of uncertainty@4. The situation is reminiscent of the strategy used by Kaldor and Hicks when they were looking for a normative anchor on which to hang their modern approach to welfare economics. When looking at a particular policy proposition, the Pareto principle should be invoked as if it were unknown who the beneficiaries of that policy would be and who would be harmed. It should be sufficient to satisfy the compensation possibility criterion, i.e. the total benefits summed over all individuals should outweigh the total costs summed over all individuals, so that in principle, the former could compensate the latter. The reason for this approach, which denies the existence of well established property rights and legitimate expectations on which investment decisions are being based, was the notion that in the long run and with a consistent application of this principle, the distribution of costs and benefits would be uncertain and hence likely an even one so as to provide for a net benefit to all, not of any particular policy measure, but of the adoption of the policy rule.
II. A Coasian View
Against this reasoning, which, in fact, underpins the entire edifice of modern welfare economics, Ronald Coase has consistently argued with respect to the special case of externalities that such externalities merely reflect the existence of incompatible uses of the same resources by different agents. In the presence of well established property rights, and in the absence of significant transactions costs, externalities cannot persist since the right of use will be appropriated by that actor with the highest willingness to pay or, alternatively speaking, he who experiences the highest cost from an externality will seek to contain those costs by either establishing his property rights over the entire range of resource uses or else by trying to recover as large a compensation as possible from the sale of his rights of usage.
By way of example, consider a coal based electricity generation plant located in a valley close to a river from which it can take cold water for its cooling tower, which it partly re-emits into the river and partly into the air. Assume further that, next to the warming effect, there is no further contamination of the water which is being re-introduced into the local ecological system. In addition, electricity generation by burning coal leads to partly toxic fumes which can be reduced to safe levels by building large smoke stacks and thereby distributing the substance over a large area. The local economy in the ecological system is further assumed to consist of agriculture based production, for the sake of simplicity we assume wine growing on the slopes of the mountain surrounding the river and fishery in the river.
From a physical point of view, there is emittance of fumes into the air, which can be spread over a large area so as to avoid safety problems: there will be a warming of the water and a certain amount of (clean) steam being released into the air. Both a combination of a warmer river and steam in the air are likely to lead to the formation of mist which inhibits sun exposure of the grapes.
From the point of view of the fishery industry, the warming of the river will affect the existing supply of fish. Finally, if additional sources of toxic smoke are located outside our ecological system in question with similar techniques of dispersion, the operation of the carbon based power plant within the system may well lead to unsafe levels of toxic exposure, in the sense that ceasing the operation of the plant would reduce the levels of toxic exposure again to safe levels.
On the basis of these assumptions let us look at the externalities in question from a Coasian point of view. The intra-system externalities crucially depend on the number of different uses we allow to be made of the eco-system. We have incompatibilities between the power plant and the wine growing industry, between the power plant and the fishing industry, but no incompatibility between wine growing and fishing - small wonder, since both have probably co-existed for a long period of time with well established property rights governing the use of the river and the surrounding mountain slopes. The negative effects from warming of the river can probably be contained on the part of the fishing industry if there is certainty about the temperature of the water and fish used to higher temperatures can be bread and harvested in that segment of the river. That would, however, imply that the inflow of colder water will now have to be regarded as a negative externality from the point of view of using the river for warmer water fish. Hence, any arrangement as between the fishing industry and the power plant would have to involve guarantees and compensation schemes with respect to the temperature of the river. Both the right to bread and harvest fish and the right to emit warm water would have to be curtailed so as to make the two uses of the river compatible. Fishermen would not be allowed to bread and harvest those species of fish that are particularly vulnerable to large fluctuations of water temperature, and in particular vulnerable to excessively low levels of water temperature, because that is most difficult for the power plant to control during the spring season when the ice is melting in the mountains. With respect to these two parties, then, a partitioning of the traditional rights of uses would allow trade and contractual arrangements governing this trade.
With respect to the relationship between the power plant and the wine growing industry, the formation of mist is crucial, which implies that under those weather conditions when mist is crucial (in particular during the early Fall when sun exposure is necessary for the grapes to ripen and mist can lead to the contamination with insects and diseases) the two uses of wine growing and cooling with river water have to be reconciled. Hence, a contractual arrangement needs to be designed that governs the ejection of steam during these sensitive periods: alternative forms of cooling or additional forms of re-cooling the steam before re-emanating it into the river or ejecting it into the air may have to be considered, the timing of ejection or emanation may also be crucial during the day, as for instance late afternoon mist formation on sunny days in unlikely. Again, a partitioning of property rights with respect to the water use including the possibility of mist formation and with particular emphasis on that possibility during crucial periods of growth and harvest will in all likelihood allow for the internalization of the externality through an effective definition of property rights.
The analysis has, so far, been substantially facilitated by limiting the number of alternate and partly incompatible uses of the common resource (the valley with the river) for the three different purposes of energy generation, wine growing and fishing. In addition, the plant emits toxic fumes, which, however, become toxic only if additional sources of emission exist outside the system. Obviously, here a different ecological regime needs to be defined for that particular resource use, which is independent from the other resource uses. It is here where the principle of subsidiarity has to be invoked.5 In order to draw the conclusions from the Coasian analysis, it is interesting to note which decisions need to be affected in order to allow compatible resource use by means of an optimal partitioning of property rights. With respect to the power plant, it is important to recognize the alternate uses in choosing appropriate technologies and modes of operation. On the one hand, with respect to agriculture (wine growing), plant operation needs to take into account weather conditions during particular periods of the year with respect to providing for a containment of the emission of the cooling substance water into both air and river. This may require a different definition of peak times with respect to production, alternate uses of cooling equipment, larger cooling systems so as to have more standby cooling power as well as close monitoring of weather conditions. These decisions, in all likelihood, can be cost effectively taken at the time of plant construction and design. Later, it will likely be more expensive to make alterations or take these conditions into account as constraints on operation. This aspect of the scenario is consistent with the assumptions in the global warming debate, which also contain the notion that an early intervention will lead to lower total costs than a later one.
With respect to the relationship between the power plant and the fishermen, again the management of the emanation and emission of the cooling substance is crucial. Interestingly, here at times a larger inflow of warm water into the river may be required in order to protect the fishing stock from sudden drops in water temperature. As obviously the pattern of breeding and harvesting fish can largely contain the cost of sudden temperature drops, during Winter seasons different fish can populate the river than during Summer seasons, the requirement may only involve relatively small peak periods and, in this case, require the emanation of uncooled water into the river. Again, a large water reservoir and the ability of using and managing different forms of cooling will be required for this approach to be successful. Very similar to the first case, again the cost of operation will largely be affected by the timing of the decisions, and when the decisions can be taken at the time of design and construction of the plant, the costs will in all likelihood be much lower than if later alterations of plant design, process of production or management need to be implemented.
III. Basing Environmental Taxation on Opportunity Costs
A
The tax which each individual is bound to pay ought to be certain, and not arbitrary. The time of payment, the manner of payment, the quantity to be paid, ought all to be clear and plain to the contributor, and to every other person.@6When we deal with effective environmental taxation, every one aspect of this principle, which is part of the traditional canons of taxation, stands to be violated. To see this, we have to invoke the difference between objective costs and subjective or choice influencing costs, that has been effectively introduced into public finance analysis by James M. Buchanan.7 Pigou=s theory of regulatory taxation8, which underlies the current literature on environmental taxation, is based on the notion that the external costs of a particular activity can be internalized into the decision calculus by means of imposing a tax, thereby reducing the externality. This requires, however, that the taxing authority is aware of the costs. This in turn requires the notion that costs can be objectively measured. Costs that can be objectively measured, on the other hand, need not be those that influence decisions. As we have seen in the introductory survey, carbon taxes are supposed to meet an in-elastic demand for carbon fuel, only in the long run leading to the substitution of more energy efficient carbon fuels over less energy efficient ones. Speaking of an in-elastic demand subject to taxation means that the tax does not influence the decisions of the taxee to any large degree.
In order to appreciate the breadth of this statement, consider the example used before in the following way. After the electric power plant has been installed and power supplies have been improved for the region, the wine growers suddenly and unexpectedly experience heavy losses due to the formation of mist in the valley. They intervene with the government which proceeds to impose a power penny, i.e. a certain percentage charge on each currency unit billed. The Ax@ percentage charge, called a power penny in order to emphasize its environmental appeal, is calculated to equal the losses of the wine growers and implemented as an ecological regulatory charge. No doubt, this power penny satisfies Smith=s criterion of a certain tax, and it can be readily implemented, since the charge can just be added to the normal bill. Yet, the power penny is unlikely to have any significant effect on the activity of the power plant that causes the externality. Although the vintners may be compensated for the damages they suffer, the economy as a whole still suffers the loss of either less wine production or wine of lower quality or both, while energy will be more expensive for all. Hence, the bundle of products available to consumers in the economy will be smaller with the same money income, the power penny only spreads the externality, it does not internalize it. The power penny, in this sense, is no different from the smoke stack. It just spreads the externality, like a financial equivalent to the physically distributing chimney.
An environmentally and ecologically relevant tax needs to be a tax that affects the choice influencing costs. In designing such a choice influencing environmental tax, we have to look for the time and locus at which environmentally relevant choices are made. Since these choices are not made on any basis of periodicity as a normal tax would require, an incentive needs to be created which triggers the tax. This may sound paradoxical, since a tax is by definition an involuntary payment that for this very reason tends not to be initiated by the entity to be taxed. In the case of environmentally relevant taxes, however, the situation must be different. Neither choice influencing costs, which are subjective, nor locus and time of decision making are directly or indirectly observable by an outside agency, such as a tax authority. In our example, the appropriate decisions with respect to the design of the plant, the production process and the management of production with a view to allowing different uses of the same resource can, but need not be taken before production activity actually starts or when new investments are due.
The objective of the tax is to encourage environmentally and ecologically preferable plant design, production processes and production management, but what this design, these processes and the management will be is only known to the decision takers involved, and only after an appropriate decision making process has been launched. This implies that the tax involved can only be of the type of an incentive. If that is the case, however, the question arises as to what might constitute the tax base.
As we noticed above, partitioning of property rights so as to make different resource use compatible in fact moves the production possibility frontier in a north eastern direction. The resulting production potential constitutes a source of earnings for the participants, which in itself constitutes a tax base. When a tax authority tries to encourage the creation of a stream of income in order to broaden the tax base, it can grant deductions as an incentive. Such
deductions then can form an appropriate lever to encourage environmentally or ecologically desired changes, which cannot be prescribed but only be triggered by way of incentive. The system then takes on the following form. When a particular project is to be added to an existing eco-system, as in our case the power plant, building and operation permits need to be secured as usual. Similarly, financing will be dependent on these permits. Under the present regime, no particular attempt at redefining property rights through multiple negotiations can be expected. The transactions costs required to lead to an optimal repartitioning of property rights in these cases can be assumed to be substantial. It is here where the ecological tax instrument must provide a lever.
An opportunity for re-negotiating a partitioning of property rights in order to make different uses of the same resource compatible can be created by providing for a tax incentives on the grounds of ecologically desired improvements. If a scheme such as the one outlined in section II can be presented and shown to lead to substantial savings and/or extended production possibilities, an Ax@ year tax credit for the income generated through the scheme can be granted upon certification by an environmental regulatory authority. The tax credit can, in turn, be used as collateral for the outlays needed in order to facilitate implementation of the agreement arrived at. This solution implies that the information needed for the decision of the tax authority is totally forthcoming from the parties involved and, as it needs to be certified by the environmental regulatory authority and does not require any additional information gathering on the part of the tax authority. The tax credit can easily be implemented within the context of current procedures, and the tax base has been broadened by the volume of the income generated (I) through re-partitioning of property rights multiplied by (n - x), with An@ being the time during which taxes can be expected to be levied.
As we look at Adam Smith=s criteria, we notice that this scheme violates every one aspect of his principle of certainty. The tax incentive is not the same for each tax payer, as it crucially depends on the specifics of the re-partitioning scheme negotiated. Although the tax incentive is not arbitrary, it is certainly not well known in advance. The time at which it becomes effective depends only on the activities of the taxees, as does the manner of payment, as even does the quantity to be paid, and none of these is clear and plain in advance. What becomes clear and plain is the tax credit, as this instrument needs to be used as collateral. The tax credit, in turn, drives the implementation of the scheme. If the authorities err in setting the tax credit too low, the scheme will not be launched and the additional increase of the tax base will not be forthcoming. If they set it too high, they still increase the tax base but forego some tax
revenue.
Ironically enough, this environmental tax as a tax credit satisfies the double dividend criterion. The double dividend even has an institutional realization. The environmental dividend is being certified by the environmental authority, the fiscal dividend is being certified by the tax authority granting the tax credit.
IV. A Simple Illustration
At the heart of the proposal made in this paper lies Buchanan's notion of choice influencing costs and, specifically choice influencing taxes. The proposal is driven by the need to define a choice influencing tax, since the point of introducing ecological taxes is to influence decision makers in their ecologically relevant behaviour. For purposes of illustration, we have defined the stylized situation of a river valley with three partly incompatible uses of the eco-system, i.e. wine growing, fishing, and power generation. Of course, this is only a stylized model, any degree of complexity can be introduced without affecting the basic issue, which is to define property rights so as to make the different uses of the resource compatible. By repartitioning property rights, the production possibilities of the economy (here in the river valley) are being broadened, but these benefits are partly offset by the transactions costs that need to be incurred in order to bring the new definition of property rights about.
If taxes are to influence choices, it is important to define or identify those decision points where choices can actually be taken. The difficulty with identifying such decision points is that a tax administration cannot by itself accomplish this task. Only a general rule broadly describing the decisions and their consequences will allow the identification of a particular decision point, a point in time which is subject to decisions by the tax payer. This is in itself not an anomaly. In the presence of capital gains taxes, for instance, tax payers will take their decision so as to minimize the liability, they will therefore choose the point of a transaction that leads to a capital gain with a view to minimizing the tax liability. In the case of ecological taxes, we want to stimulate neither capital accumulation nor tax avoidance but a positive ecological decision, which means that an incentive needs to be defined so as to induce parties to change their behaviour in an ecologically positive way. In our stylized example, the decision requires co-operation of the three parties involved, with respect to
a) the choice of technology and process management of power production;
b) the choice of fish to bread and harvest;
c) in all likelihood also the choice of grapes.
The crucial decision involves the consensual repartitioning of property rights in order to make a resource use compatible, and on this repartitioning decision rest the three decisions named above.
An important issue in this case is technology choice. The stylized example involves two different types of technology choice. On the one hand, inside the ecological system as defined in section two, the relevant technology choice refers to the cooling system, which in our example must be flexible enough so as to provide for either warm water directly emitted into the river, or water being retained within the cooling system long enough so as to prevent the formation of mist at crucial moments. However, another technology choice is relevant with respect to the ecological system itself and interests outside this system. This is the choice of fuel to be used for the generation of electrical power, such as carbon or nuclear energy.
V. Issues of Implementation
This section is devoted to showing the substantial difference between a traditional eco-tax and the environmental tax instrument developed in this paper, which imposes the environmental tax by (seemingly paradoxically) working with the tax credit. Such a comparison, of course, must be a mental exercise, since the new instrument is not yet in place, we cannot conceivably have data on which to base a comparison. Even if we had such data, due to the complexity of how this instrument works, as it affects the behaviour of the respective agents in the long run including the choice of technology, it would be difficult to find proper cases to compare: the number of relevant variables would be large, the time spent over which the comparison would have to be conducted would necessarily have to be a long one and, by implication, the number of intervening variables would also have to be considered high.
On the other hand, such a comparison is necessary in order to gorge the practical feasibility of the proposal. It would be irresponsible to propose a tax instrument with such deep and far flung consequences if we could not at least offer a framework in which to analyze the respective effects of alternative ecological taxes. Such a framework I am trying to offer in this section of the paper.
In developing this framework, I can rely on the traditional theory of taxation, developed already by Adam Smith9 and with variations reproduced in every major text book in public finance. I am referring to those criteria by which we judge whether tax is Agood@ in a very specific sense and should therefore be supported, or whether it fails this test. A tax is, of course, not a good thing as such. Yet when we accept the reason for its existence, such as the need to raise revenues for a particular public purpose or, in this case, to conduct environmental policy, then we can discuss different tax instruments from the point of view of that need in terms of the criteria that follow. In their modern version, we typically distinguish five such criteria or principles which constitute the canon of taxation.10
On the other hand, these five criteria can be applied to the conceivable levels or jurisdictions of taxation. In principle, we can distinguish between the federal level in a political entity that is constituted of Member States, a level of the Member States, as well as the original territorial entities, such as a municipality, counties, cantons and the like. Obviously, if a federal system is itself part of a federation, the discussion here offered under the first level of the federal government needs to be repeated twice, once for the overall federation and once for the Member State as a federation. In addition to these three levels of government, the federal, the state and the local level of government, we also have the functional forms of government, which have become increasingly important in recent times. These functional forms can be defined differently, functionally or territorially for instance in ecological entities such as a water basin (the Dutch Awaterschappen@), a mountain ridge or a sea basin, they can also be without any territorial link, such as when a profession is publicly chartered and has its publicly sanctioned rules and dues. These dues are taxes in our sense. There may be room for an important increase in the role of these entities, as Bruno S. Frey has argued in various papers on the importance of functional overlapping competitive jurisdictions (FOCJ) in a series of papers11. This approach yields a five by four matrix, with the five principles of taxation vertically arranged and the four levels of government horizontally enumerated. We shall now discuss the four levels of government in turn, with the five principles as our guiding criteria.
The Matrix of Comparison
|
1 Federal |
2 State |
3 Local |
4 FOCJ |
1 Efficiency |
1 |
6 |
11 |
16 |
2 Feasibility |
2 |
7 |
12 |
17 |
3 Flexibility |
3 |
8 |
13 |
18 |
4 Responsibility |
4 |
9 |
14 |
19 |
5 Fairness |
5 |
10 |
15 |
20 |
As the Pigouvian regime sets fixed rates per output hinged on particular technology choices, it opens every door for rivals attempts to target particular technologies in their own interest and at their rivals detriment. Once the per unit of output charges are in place, they are difficult to remove, and the damage to the rival can be substantial. On the other hand, the choice based tax instruments, as it is an individualized almost custom made package for each particular set of decisions makes, it is very difficult for rivals to effectively intervene as they can in the Pigouvian scenario. Hence, from the point of view of preventing rent seeking, the choice based approach is preferable, yet again the federal level has a very small role to play, only at most a supervisory one, probably to be exercised by the respective court of audit of that federal jurisdiction.
VI. Concluding remarks
The answer to the question noted in the title of this paper then becomes clear and simple. An effective ecological tax is a tax credit on personal or corporate income taxes upon certifications of an ecological improvement scheme. The tax credit kicks in when the scheme is being made effective. The operation of the scheme depends solely on the co-operations of tax payers, it requires no additional information on the part of necessarily underinformed public authorities. Interestingly, there is a new and peculiar double dividend in the sense that next to an ecological improvement, there is a new revenue stream for government.
Notes
1
Comments from two anonymous referees and the editors are gratefully acknowledged.2
Parts II-IV can be read after skipping part I.3
Frederick Seitz, "A Major Deception on 'Global Warming'", Wall Street Journal Europe, June 20, 1996 and "Letters to the Editor": "Cover-up in the Greenhouse?", August 6, 1996.4
Quoted after Bohm, 1996, p.4. The original quote is L. Goulder, "Environmental Taxation an the 'Double Dividend'. A Reader's Guide". Paper presented at the International Institute of Public Finance, 50th congress, Cambridge, Massachusetts, August 23-25,1994, also in NBER working paper, nr. 4896.5
See Jürgen Backhaus, "Subsidiarity and Ecologically Based Taxation: Aspirations and Options", in: Sabine Urban (ed.), Europe in Progress, Wiesbaden: Gabler, 1995, pp. 223-264.6
Adam Smith, The Wealth of Nations, (1786) book 5, chapter 2, part 2, section 2. London: Dent, 1971, II, p.306.7
James M. Buchanan, Cost and Choice: An Inquiry in Economic Theory. Chicago: Markham, 1969.8
In mentioning Pigou's name, I feel compelled to add that Pigou himself felt corrective taxes to be impossible, as the taxing authority would lack the requisite information. See A.C. Pigou, Socialism vs. Capitalism, London: McMillan, 1947, pp. 40-44: "But the practical difficulty of determining the right rates of bounty and of duty would be extraordinarily great. The date necessary for scientific decision are almost whole lacking". (pp. 42/43).9
Adam Smith, The Wealth of Nations, (1786). London: Dent, 1971.10
See for instance, Joseph Stiglitz, Economics of the Public Sector, New York: Norton.11
See Bruno S. Frey an Reiner Eichenberger, "FOCJ; Creating a Single European Market for Governments", in: Dieter Schmidtchen and Robert Cooter (eds.), Constitutional Law and Economics of the European Union, Cheltenham: Edward Elgar, 1997, pp.195-215.12
Arthur Cecil Pigou, (1947):13
See James M. Buchanan and Gordon Tullock, The Calculus of Consent. Ann Arbor: University of Michigan Press, 1969. Originally suggested by John Caldwell Calhoun in his "Speech on the Admission of California - and the General State of the Union", (March 4, 1850). In John C. Calhoun, Union and Liberty. Indianapolis: Liberty Fund, 1992, pp.571-601.14
See Gustav Schmoller, "The Idea of Justice in Political Economy", in: Annals of the American Academy of Political and Social Sciences, IV, 1908, pp.697-737.15
See Jürgen Backhaus, "Subsidiarity and Ecologically Based Taxation: An Essay on Public Choice From a European Point of View", Public Choice 88, 1996.See Roger van den Bergh, Michael Faure and Jürgen Lefevre, "The Subsidiarity Principle in European Environmental Law: An Economic Analysis", in: Erling Eid and Roger van den Bergh (eds.), Law and Economics of the Environment, Oslo: Jruidisk Forlag, 1996, pp.121-166.
16
See Gerd Winter, Das Vollzugsdefizit im Wasserrecht. Berlin: Schmidt, 1975.17
For the details on this scheme, see Bruno S. Frey and Reiner Eichenberger, "FOCJ; Creating a Single European Market for Governments", in: Dieter Schmidtchen and Robert Cooter (eds.), Constitutional Law and Economics of the European Union, Cheltenham: Edward Elgar, 1997, pp.195-215.18
See Benito Arruñada, "In the Economics of Notaries", European Journal of Law and Economics, 3 (1), 1996, pp.5-38.
Literature
Benito Arruñada, AIn the Economics of Notaries@, European Journal of Law and Economics, 3 (1), 1996, pp. 5-38.
Backhaus, J., "Subsidiarity and Ecologically Based Taxation: Aspirations and Options", in: Sabine Urban, Europe in Progress, Wiesbaden: Gabler, 1995, pp. 223-264.
Roger van den Bergh, Michael Faure and Jürgen Lefevre, AThe Subsidiarity Principle in European Environmental Law: An Economic Analysis@, in: Erling Eide and Roger van den Bergh (eds.), Law and Economics of the Environment, Oslo: Juridisk Forlag, 1996, pp. 121-166.
Bovenberg, L. and R. de Mooij, AEnvironmental Levies and Distortionary Taxation. American Economic Review, vol. 84, no. 4, September, 1994, pp. 1085-1089.
Buchanan, J.M., Cost and Choice: An Inquiry in Economic Theory. Chicago: Markham, 1969.
James M. Buchanan and Gordon Tullock, The Calculus of Consent. Ann Arbor: University of Michigan Press.
Bruno S. Frey and Reiner Eichenberger, AFOCJ; Creating a Single European Market for Governments@, in: Dieter Schmidtchen and Robert Cooter (eds.), Constitutional Law and Economics of the European Union, Cheltenham: Edward Elgar, 1997, pp. 195-215.
Goulder, L., AEnvironmental Taxation and the ADouble Dividend@. A Reader=s Guide@. Paper presented at the International Institute of Public Finance, 50th congress, Cambridge, Massachusetts, August 23-25, 1994, also NBER working paper, nr. 4896.
Pearce, D., AThe Role of Carbon Taxes in Adjusting to Global Warming@, Economic Journal, vol. 101, 1991, pp. 938-948.
A.C. Pigou, Socialism vs. Capitalism, London: McMillan, 1947, pp. 40-44.
Gustav Schmoller, AThe Idea of Justice in Political Economy@, in: Annals of the American Academy of Political and Social Sciences, IV, 1908, pp. 697-737.
Schneider, F. and Volkert J., ADie Realisierung ökologisch-orientierter Wirtschaftspolitik - eine Unmöglichkeit? Überlegungen aus Sicht der Neuen Politischen Ökonomie@. Arbeitspapier: 9611, Juli 1996.
Frederick Seitz, AA Major Deception on <Global Warming'@, Wall Street Journal Europe, June 20, 1996 and ALetters to the Editor@: ACover-up in the Greenhouse?@, August 6, 1996.
Adam Smith, The Wealth of Nation, book 5, chapter 2, part 2, section 2. London: Dent, 1971, II, p. 306.
Joseph Stiglitz, Economics of the Public Sector, New York: Norton.
Gerd Winter, Das Vollzugsdefizit im Wasserrecht. Berlin: Schmidt, 1975.