The adoption of a pollution tax revenue system would be beneficial to all nations; such a tax system would save our planet. Humanity will not be able to survive without the establishment of pollution taxes.
It is important to identify a way to inspire the majority of the governments represented at the United Nations to collectively adopt a domestic pollution-tax revenue system, and to support individual nations in their efforts to adopt such a system in place of the traditional income tax-based revenue-generation systems currently used.
Additionally, nations must work together to establish a functional support system, so that those nations which are implementing pollution taxes would not bear financial liability when competing against nations that do not issue pollution taxes. Such a two-part pollution-taxing system will allow governments to operate their own internal, nation-wide systems of collecting agreed-upon pollution-tax minimums, without affecting their exports’ international competitiveness due to the burden that costs associated with collecting pollution taxes could have on their domestic production costs. Such a system would be structured as follows:
The current income tax model would be replaced with a comprehensive pollution-tax system, including import pollution taxes; all taxes collected by a given nation would go into that given nation’s treasury; there is no element of outside involvement of any other party. The process of tax collection, and use of that revenue, would absolutely be under the control of the taxing nation. Control of each nation’s tax collection would remain as it is currently under the income-tax system. It is only the methods by which taxes are collected, and for what, that would change.
The only internal structural difference for a nation with a pollution-tax-based revenue system is a modest change in each nation’s relationship with its Federal Reserve/Central Bank, as this new structure involves setting up a sovereign wealth fund to grow long-term income for individual pollution-taxing nations through an inflation tax. If this change is handled correctly, there may be little to no actual inflation tax.
By adopting a pollution-tax revenue system, nations could insure that the global repair to the earth’s environment from decades of poor international environmental policy would truly take place, while simultaneously providing a profound economic synergy, creating a new international financial renaissance in national economies worldwide. This would cause an infusion of investment and long-term wealth creation among pollution-tax-implementing nations.
Implementing pollution taxes will provide a worldwide positive environmental and economic change, creating new levels of national wealth and improvements in the global standard of living.
What are Pollution Taxes?
The pollution-tax system requires placing a minimum domestic tax on the internationally agreed-upon types of pollution, in all the applicable forms of a given type of pollution’s creation. Because of the nature of technological development, pollution taxes, once implemented, should be systematically updated, allowing a new, sustainable global culture of living in balance with our planet’s resources, while protecting each other and future generations. Participating nations could always have their own higher, more encompassing pollution-tax policies; the only firm rules would be to enforce international agreements regarding the minimum tax requirements.
Taxing pollution rather than income benefits every nation on earth. By doing so, all nations would achieve a higher standard of living—a much cleaner, safer, more sustainable environment, with an improved and more stable economy. Current income-tax systems are anything but fairly applied, but a comprehensive pollution-tax system could be an effective, fair way to have justice for all in a taxation system.
Taxes on all types of pollution must be levied, with the minimum amount for these taxes being at least 200 percent of the difference in cost for the nearest nonpolluting option. Additionally, pollution taxes must be comprehensive in nature in order to be fair to all nations, to prevent manipulation by the unscrupulous, and to be functional in that the tax actually reduces pollution.
Once the UN international minimums of pollution tax have been internationally agreed upon, those participating nations that have signed on and have begun to charge domestic pollution taxes will also be required charge minimum amounts for the pollution taxes on their imports from countries that do not have their own domestic pollution taxes.
Pollution taxes would only work well under the framework of international agreements; otherwise, the implementing nation(s) could face a greater domestic economic liability than the non-pollution-taxing nations.
This would require the creation of an international partnership, a type of international organization of trade partners. One proposed name for such an organization would be E.N.O.U.G.H. (Environmental Nations Organization, United for Growth and Health). Such an organization could become a foundation for negotiations among like-minded nations to develop a framework for a system of rules for international minimum tax standards on pollution types.
The purpose of pollution taxes is to create a cost for pollution through the concept of taxation on a society, in order to be purposeful about the collection of revenue for the running of a government.
Examples of pollution types that would be taxed include:
Countries that do not charge the internationally agreed-upon pollution taxes on imports from non-pollution-tax-complying nations would have their own trade status—that of most-favored pollution taxing nation—changed. Consequently, those nations would suffer a charge by the other pollution-tax-implementing nations, which would be a more-than-200-percent import tax on all of their exports in relation to their savings from not levying the required pollution taxes on their imports from non-pollution-taxing nations, due to their advantage of not bearing the costs involved with collecting domestic or import taxes. That cost savings would become a 200 percent liability forced upon such a non-complying nation’s entire export economy.
When a nation fails to tax the imports of a non-complying nation, its own export products would then be subject to an import tax by pollution-tax-compliant nations. This would create two income streams for nations that are implementing pollution taxes: Domestically generated pollution-tax income for nations that are participating in internationally agreed-upon minimum standards of pollution tax, as well as income from import taxes on those nations that are not living up to international standards or agreements on pollution taxes.
Nations that let pollutants run into the air, soil, streams, and oceans would levy a domestic tax on such pollution/polluters, forcing the polluting entity—regardless of whether that entity is a private company, an individual, or a local, state, or governmental/national organization—to pay the pollution tax, even if it were the same government paying a domestic tax to itself. For this pollution-tax system to work, there must not be any exceptions for any nation or polluter. The opportunities for corruption are endless unless the “no exceptions” policy is put into practice and systematically implemented. There are too many powerful interests that will ruin any possibility of success of a pollution-tax system working; the smallest holes cut into any pollution-tax system will lead to the collapse of the whole process, allowing corruption to use the tiniest of carve-outs (i.e. well-meaning, well-intentioned, politically correct special exemptions) to seep in from everywhere. Pollution taxes must be absolute and without exceptions for their fair, functional, direct application. There should never be any trading, offsetting, delaying, or special deals; if pollution happens, the appropriate tax must be paid, that’s it, no exceptions for anyone, anything, large or small. This tax is not about political correctness; it is about saving the planet, and it is important to stay focused on that reality. Even the tiniest exception made in a developing country will soon be used by major corporations in the world’s most powerful nations. A no-exceptions policy is essential, or there will end up being no rules, and no legal enforcement of pollution taxes.
If these domestic taxes are introduced comprehensively, the pathway to finding and implementing pollution reductions, proper pollution processing, and alternative solutions to pollution can be introduced. Comprehensive costs must be put into place to allow for the creation of comprehensive solutions. If we begin today, we might possibly be just in time for our planet’s environment to survive somewhat intact.
All delays in dealing with global pollution from this point in time will have a tremendous cost to humanity. There is a profound global need for costs to be levied against pollution, not just to save our collective future from the social, financial, and global effects of pollution, but to save the entire world’s collective lives from the mounting and life-threatening pollution that is now threatening the future existence of the very nations that need to establish this new pollution-tax structure. There is a real threat from pollution that far outweighs any military threat.
Nonparticipating nations that do not implement domestic pollution taxes, as well as nations that do not levy the agreed-upon amounts for pollution taxes, must face taxes on their exports from nations importing their goods in order for pollution taxes to work.
Any reprisal response from nonparticipating nations that attempts to counter “Minimum Required Pollution Taxes” must be dealt with by means of a predetermined united total trade import ban by all participating members, regardless of how badly their own economies would be affected by such a trade import ban.
A real threat must be issued in order to prevent such a problem from happening or lasting too long. In short, compliance would be the easiest and most effective way to deal with pollution taxes, as governments would eventually come to see the simple reality that their long-term survivability on this planet is dependent upon the success of pollution-tax implementation.
Enforcement of import-tax measures by pollution-taxing nations would serve as strong justification for nonparticipating nations to make to their citizens for joining in and participating, as would the revenues generated by pollution taxes. Within a short period of time, participating nations would begin reaping vast revenues from pollution taxes, and their economies would be stimulated as their businesses and local governments throughout their economies begin taking important steps to upgrade their processes and materials in order to eliminate those same pollution taxes. Governments would not be allowed to subsidize the pollution taxes they agreed to levy, but it would be perfectly acceptable for a government to subsidize the upgrades to eliminate the pollution that is being taxed.
Example: Nitrogen runoff from farming and other sources, as well as acid from the burning of fossil fuels, is rapidly doing severe damage to large areas of the world’s oceans. This is causing massive die-offs of many species of fish and sea life. Additionally, less CO2 is being absorbed in those large areas of the oceans, resulting in a net global-pollution cost to the world. A fair domestic pollution tax on that cost would motivate industries and their respective nations to change the behavior that is causing this pollution at every social and governmental level; once pollution taxes are required, a sustainable process of change will occur as nations strive to avoid pollution taxes.
Another factor to consider is that nations will pay costs associated with compliance with environmental-protection requirements. The non-taxing nations would have an unfair trade advantage. An import tax on the polluting nations would ensure that the cost advantage would not go to those polluting nations.
Those countries protecting their coastlines would be providing for healthy ocean environments that are able to properly absorb CO2, and thereby providing many other benefits to the world.
Nonpolluting countries would not collect domestic freshwater or ocean pollution taxes when such pollution isn’t occurring domestically, due to their implementation of acceptable nonpolluting practices. Consequently, these nations also would have lower pollution tax costs domestically. Other nations also would not levy pollution taxes on those complying nations’ exports, resulting in a double cost advantage to the nations that are complying with accepted pollution standards; they would have lower domestic tax costs, while greater amounts of external tax income would come from outside those nations in the form of pollution import taxes. This will be a double boost to the least-polluting nations’ economies. (Prior to the 1940s, many nations received a large portion of their revenues from import taxes.) Currently, the most polluting nations have the trade advantage.
Countries that use dirty energy sources (e.g. coal or oil) and don’t levy the necessary domestic pollution taxes internally, or whose enforcement of those domestic pollution taxes is poor, should be taxed at least 200 percent of that cost savings achieved by noncompliance—a cost that would have been incorporated into the cost of creating their economies’ products, had those nations complied with pollution taxes. This tax should be charged against those non-complying nations’ exports, in the form of import taxes. In other words, there ought to be a 200 percent cost, in relation to the savings, for any nation that is not willing to comply with pollution-tax implementation and instead seeks to reap benefits while continuing to pollute. Those nations’ exports must be taxed by the nations who have complied, in order to maintain the proper balance, with advantage going to countries participating in pollution taxing and anti-pollution efforts.
An international pollution-tax trade-monitoring organization such as the one described earlier (E.N.O.U.G.H.) would oversee such trade taxing to ensure consistency and fairness.
Pollution taxes would protect and support good domestic and foreign environmental policies, while turning imports from nations with dirty policies or conditions into sources of income for those governments that are environmentally friendly.
Justice Taxation: The Elimination of Income Taxes
Prior to implementation of pollution taxes, the promise of elimination of all or part of income taxes for individuals and businesses may be the only way possible to arrive at the type of political consensus among the many diverse groups, from the far right to the far left, that will be necessary for the implementation of pollution taxes.
The only way to get all the needed powers together to agree on pollution taxes would be for most nations to simultaneously eliminate income taxes; this would be necessary in order to motivate the greater society, with its many differing political elements and beliefs, to accept the concept of pollution taxes. This would make pollution taxes more palatable, and create the full range of acceptance capable of creating a worldwide political movement in which implementation of pollution taxes is desired, demanded, and supported by enough of the world’s political powers and their respective supporters, in order to actually make pollution taxes a reality.
With the implementation of pollution taxes, justice taxation relationships between the United States Treasury and Federal Reserve (or any given nation’s treasury and its national bank) must establish a process through which to create a 1 percent expansion in that nation’s total money supply per year, for at least 30 years. That monetary expansion is to be put into a sovereign wealth fund, which would hold the funds and investments derived from that 1 percent annual monetary expansion. These funds would be primarily invested into securities for the benefit of providing that nation with a permanent long-term revenue source that will not be income-tax based.
This 1 percent monetary expansion would not create excessive inflation, and what extra inflation is actually caused by this monetary expansion of 1 percent of the total quantity of a given nation’s currency would be, in real terms, an inflation tax—a small but fair tax applied to everyone.
The demand for a given currency in a non-income-taxing nation would be greater than the negative effects that an annual 1 percent monetary expansion going into a sovereign wealth fund would have on the value of that nation’s currency. Good public relations efforts that constantly explain the process of pollution taxes replacing income taxes, and the process of how the sovereign wealth fund will be replacing pollution taxes over the long term as pollution tax diminishes, would keep the demand for a given nation’s currency stronger than any weakening that same currency might experience as a result of the public’s fear of an extra 1 percent annual monetary expansion.
Sovereign wealth funds would buy securities, including loans of all types from banks/lenders, and then hire those banks/lenders to service and guarantee those loans; the funds would pay those banks/lenders fees from a portion of interest earned. This process would stimulate the host nations’ economies. This government-bank relationship is not only a functional necessity, but it also is a political necessity. National and international banking interests’ support of the conversion to pollution taxes and sovereign wealth funds is important due to the political power of banking interests; the process to set up this system may be politically impossible without the support of the banking system because of the relationships national banks and private banks have with governments and industries.
Banking interests could be the kingmakers in their political ability to make pollution taxes happen. Some people will oppose banking involvement, but as I have pointed out previously, the point of pollution taxes is to save the planet, not to achieve political correctness. This banking relationship is absolutely necessary to realistically achieve the goal of pollution taxes structurally, due to the government systems that are in place in our world. Stay focused on what will lead to success for pollution taxes and its benefits; all the political correctness in the world today will not keep our great grandchildren alive if we fail to reach a solution to our global pollution problems; we need wealth and power on our side, not working against us. Be realistic, for future generations’ sake.
Using investment monies from the 1 percent annual expansion of each nation’s monetary system going into its sovereign wealth fund will stimulate national economies with new investment money while, as a result, new international demand for that nation’s currency would be further created by eliminating income tax. This would create a growing structure in a positive, sustainable cycle of building up a nation’s sovereign wealth fund and economy, through the use of the 1 percent annual monetary expansion-based equity purchases.
The process creates an income stream that continually provides revenue to the pollution-tax-implementing nations while incrementally increasing in size year by year. Eventually, the revenue from pollution taxes would diminish as nonpolluting environmental safeguards are implemented in those nations to avoid pollution taxes. Consequently, the comprehensive implementation of pollution taxes would have the desired long-term result of steadily reducing the amount of pollution and the pollution tax revenue in that given nation, and around the globe.
Approximately 30 years after such national sovereign wealth funds have been set up, there should be enough income generated by each nation’s sovereign wealth fund that each respective government would be able to cover the equivalent of the entire amount of that nation’s budget, which would formerly have been generated by pollution taxes, and, 30 years before that, by income taxes. This would allow all such nations to go forward into the future, forever and ever, without the need for large quantities of pollution taxes, which, by their nature, over time, would constantly decrease as a revenue source; even better, there would be no need for income taxes.
By the time 30 years has passed after the global implementation of pollution taxes and justice taxation, there should be a dramatic reduction in global pollution, and, consequently, very little pollution tax collected for each nation’s treasury; however, pollution tax costs to each nation’s economy would also be very small.
In the future, when we compare the present state of the world’s nations to the state they had been in before pollution taxes were implemented, we will find that those nations in the future will have higher standards of living, better economies/investment environments, a much cleaner and safer global environment, a stronger revenue stream that is not income-tax based, and very few other types of taxes.
© Robert R. Senger. All Rights Reserved.