Because we’re worth it
The Listener out today has two articles about consumption that are worth a read. Their economy columnist Brian Easton wonders whether our progressive income tax should be replaced with a progressive expenditure tax. He writes:
Instead of taxing income: what one puts into the economy, why not tax expenditure: what one takes out? Should not those who can live more frugally pay less tax than the profligate? (Can I hear you saying, “Easton, you are a puritan?” I plead guilty, but am also attracted for environmental reasons)… Advocates for such a tax have included Thomas Hobbes, John Stuart Mill, Alfred Marshall and Irving Fisher, which shows that supporting it is not a matter of being politically left or right.
There is something to this idea, and it does gel to an extent with eco-tax reform that the Greens propose, which would seek to shift the tax burden from work and enterprise (i.e. “goods”) and move it on to “bads” - i.e. the consumption of certain things which, if used excessively, cost society dearly, whether socially or environmentally.
The other interesting piece in the Listener is about our consumer culture. Listener writer Noel O’Hare talks about The Overspent American, a book by Harvard economist Juliet Schor, which argues that we’ve got ourselves into a “cycle of work and spend”. Writes O’Hare:
Employers, she says, prefer to reward workers with money rather than allow them to work fewer hours, “because employees who work longer hours are more financially dependent on the firm” and because it means that they have to hire fewer people. To compensate for the lack of leisure time, workers pamper themselves with treats and luxuries, “because [as L’Oreal tells us] you’re worth it”.
From an environmental standpoint, our consumer culture is problematic - and indeed the economic mindset that, to be healthy, the economy has to always be getting bigger is problematic - because we live on a planet with finite resources. Setting up a culture and an economy, then, that is premised on trying to earn and spend as much money as possible, and trying to grow ever bigger and bigger, runs counter to the finite means within which we have to exist. We cannot have never-ending growth on a finite planet. At some point, we’ll get too big for the environment that sustains us.
May 1st, 2005 at 1:28 pm
“…the economic mindset that, to be healthy, the economy has to always be getting bigger is problematic - because we live on a planet with finite resources”.
Economic growth need not equate to using more finite resources. Its about creating more value, and this can be done sustainably. Windpower is a good example - heavy investment in windpower R&D followed by capital investment by windpower entrepreneurs has created value (electricity with neglible variable cost) and contributed to economic growth.
Isn’t population growth a more reasonable target for your concerns than economic growth?
May 1st, 2005 at 11:36 pm
I’ve heard the line ‘We should tax ‘bads” several times on this blog now. The issue that I have, is what form these ‘bads’ would take. Obviously it would be pollution, and fatty foods and the like… but what else?
In my mind, for the Greens to be seen to have an economic policy that is seen to work, then more detail is needed. What will be taxed, how much it will be taxed, what taxes will pay for, etc., all need to be documented.
May 2nd, 2005 at 1:50 pm
You want details, Steve? Glad you asked. We’ve got plenty of details. Our Eco-Tax policy is here:
http://www.greens.org.nz/searchdocs/policy5430.html
Our submission to Treasury’s Tax Review in 2001 is here:
http://www.treasury.govt.nz/taxreview2001/Subs1/TheGreenPartyofAotearo aNewZealand.pdf
The first steps would be to make diesel users pay their fair share (at the moment they don’t pay as much as cars that run on petrol); and to implement a low-level carbon charge, of $10 per tonne of CO2.
Clearly, tax reform along these lines would be a slow, gradual process, but you get the idea, right?
May 2nd, 2005 at 4:07 pm
So the ‘bads’ also are ’scarce resources’ according to http://www.greens.org.nz/searchdocs/policy5430.html . So, given you’d be raising the prices of scarce resources, wouldn’t that make it worse for poor people? I mean, you briefly say ‘No, it won’t hurt poor people’, but at the end of the day, the poor need a car just as much as others, the fact is though that others are more likely to be able to afford it.
Also, there is another party that promising radical tax reform. The Libertarianz. They want to get rid of Income Tax. Just, admittedly, not replace it with anything