May 3, 2019


Carbon Taxes: What Can We Learn From International Experience? (Gilbert Metcalf,·May 3, 2019, Econofact)

Pollution is a textbook example of how government intervention can correct a problem of a "missing market." Burning fossil fuels when we use gasoline to power our vehicles, coal to produce electricity, and natural gas to cook our meals and warm our homes during winter, generates pollution. While this imposes a cost on society, those who pollute do not bear that cost. Economists call this a "negative externality" because the costs are external (not borne by) those engaged in the activity. There is, from a societal viewpoint, an undesirably high level of production and consumption of goods that have negative externalities, since the prices charged for such goods do not reflect their true social cost, which is higher than the market cost. This market failure justifies government intervention. One possible intervention is a tax that raises the price of these goods and activities, and thus lowers their consumption.

Carbon taxes are a practical way to have consumers and producers take account of the social cost of pollution that increases greenhouse gases. Carbon dioxide, CO2, is a greenhouse gas, and there is scientific consensus that greenhouse gases emitted from human activity are an important source of global warming. The amount of CO2 associated with burning a ton of coal or a gallon of gasoline, or producing a therm of energy from natural gas, is a physical constant. Carbon taxes can therefore be accurately assessed in terms of how the reduction in the use of coal, gasoline or natural gas leads to a reduction in the emission of carbon dioxide. [...]

As the British Columbia case shows, the additional revenues generated by a carbon tax can be used by governments to reduce their potential negative impacts. The more than $1 billion that have been collected each year by BC's local government, have been returned to households and businesses through different mechanisms. Low-income families and small businesses are receiving tax credits, and their tax rates have been reduced. A one-time dividend was also given to every BC resident, a measure that is highly progressive since a cash rebate has a larger impact on the disposable income of lower-income families. I have also found that, thanks to these counter-measures, BC's overall economic activity has not been adversely affected by the carbon tax. Additionally, while carbon taxes have stimulated employment (although modestly) across all industries, jobs have shifted from carbon and trade sensitive sectors, such as chemical manufacturing, to cleaner service industries, such as health care.

After Supreme Court ruling, Texas bills would bring in $850 million in online sales tax: Lawmakers moved to apply the state's sales tax to goods sold by remote vendors who don't have physical operations in Texas. (EDGAR WALTERS MAY 3, 2019, Texas Tribune)

Texans who shop online could soon see purchase prices go up -- filling the state treasury by roughly a half-billion dollars over the next two years -- thanks to a proposed new sales tax levy on out-of-state sellers.

A pair of bills unanimously advanced by the Texas Senate on Friday would allow the state to collect sales tax on items sold by vendors who do not have a physical presence in Texas. A 2018 U.S. Supreme Court ruling in the case South Dakota v. Wayfair Inc. held that such taxes were constitutional.

One bill allows for the Texas Comptroller to identify a single tax rate to apply to remote sellers and is expected to generate $300 million over the next two years. Because local taxing jurisdictions in Texas have varying sales tax rates, ranging from 6.25 to 8.25 percent, lawmakers say the bill is intended to simplify online vendors' sales tax calculations.

Lawmakers already assumed they would have the additional $300 million available to them after the Supreme Court ruling, so the bill would have no effect on the 2020-2021 budget that lawmakers are currently deliberating. That bill was agreed to by both chambers and heads next to Gov. Greg Abbott.

But another bill would apply the state sales tax to remote sellers who use online, third-party marketplaces such as Etsy, Ebay and Amazon, and is expected to yield more than half a billion dollars for the state. If a Texan purchases an item online from a seller in another state using a "marketplace," a definition that includes websites and software applications, the marketplace would be responsible for collecting and paying sales tax on those transactions. Officials estimate the bill would yield an additional $550 million in 2020 and 2021 above what lawmakers included in their budget assumptions.

Posted by at May 3, 2019 7:34 PM