Thursday, March 23, 2006

China Introduces Wide-Ranging Green Taxes

I'm a day late on this (and maybe a dollar short... stay tuned), but yesterday CNN published this story on China's plan to introduce consumption taxes on a wide range of products:
Plans to impose a 5 percent consumption tax on both disposable wooden chopsticks and wooden floor panels would help curb the plundering of timber resources and efforts to protect the environment, the Ministry of Finance said.

Disposable chopsticks used up 1.3 million cubic metes of timber each year, depleting the country's forests, the ministry said.

From April 1, China will make its biggest adjustments to consumption taxes in 12 years, with its newly stressed national goals of slashing energy consumption and stemming environmental degradation in mind.

The move was aimed at "promoting environmental protection and economizing on resources while better guiding the production and consumption of certain products," the ministry said on its Web site.

Among the most significant changes will be adjustments to car taxes, with levies poised to rise as high as 20 percent for highly polluting vehicles with larger engines.

China would also broaden the scope of oil products subject to consumption levies to include fuel oil, jet fuel and naphtha and lubricants, as the government leans more on pricing mechanisms to curb the country's rampant use of energy.

Adjustments were also made to level new consumption taxes on golf balls and equipment, yachts and luxury watches and to scrap charges on skin care and shampoo products, once seen as the privilege of the wealthy, but which have become commonplace as incomes have risen.
I continue to be impressed by the efforts the Chinese (and the Indians, for that matter) are making to address the harsh environmental impact of their growing economy. I suppose some will say that such measures could only work in a centralized totalitarian state, but I'd love to see more attempts by democratic governments to offer revenue-neutral green taxes as an alternative to the income tax. There are certainly problems that would have to be addressed, specifically the hardship placed on low-income citizens and families, but perhaps (as Paul Hawken argued in The Ecology of Commerce) a gradual shift and addressing payroll taxes first would ease the transition.

Of course, if you'd like to read the opinions of someone who knows what he's talking about, go see Tim Haab's post from yesterday and today at Environmental Economics.

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