Mural, done. Woot! Commentary: Eco Fees
I was randomly surfing the internet when I happened across this little gem 1. I read it and immediately thought of something that Mankiw2 has been espousing for quite a few years, pigovian taxes 3.
From the arm of my chair I commented on the article:
“One of the first, and definitely not the last example of a pigovian tax. Essentially, an attempt to offset the cost of goods that have negative externalities – with taxes. Unfortunately, this one was poorly marketed but that doesn’t mean it’s any less necessary.”
The responses to which, as you can see on the page itself (link below), were quite negative and riddled with a mixture of political punditry. But what I can say for the responses is that it did get me thinking.
“Wether you pay the tax upfront when you buy the item, or you pay the tax afterwards through your provincial/property taxes when the local municipal dump is overflowing with toxic waste is somewhat less than relevant.
The real cost of some of our purchases, is higher than the price tag we see on the shelf for many of these goods. Sure you’re covering (maybe) some of the true economic cost of production, but what about disposal?
It’s not a socialist experiment. It’s a reality that we all have to come to grips with. Especially in a day and age where environmentalism is fashionable for politicians. Just because the implementation (haha, marketing) was wrong doesn’t mean that taxes like this are going to go away or stop coming.
Actually, I think retailers are doing those who give a damn a favor by showing consumers which products have a cost beyond what they’re paying. Perhaps it could even cause a reduction in toxic waste as consumers turn to substitutes in the face of increasing prices or even simple awareness.
It’s easy to focus on the underlying politics (Lib vs. Con vs. NDP vs. The World) and not the economics (econutics?). But it leaves one ignorant of the the big picture – you pay for it in the end either way wether it’s hidden in your lump of provincial tax payments while you’re unaware or it’s in your face on the bill telling you which products create toxic waste.”
I didn’t realize the national post had such an intensely anti-liberal readership, even the article itself is a bit suggestive with Lisa MacLoed’s statement as a conclusion. Is it that close to election time already?
Note: I bought your book, Greg, and it really is the best economics book out there. A nice balance between Keynesian and Classical
from my "ecological" point of view, I often think that we (or the government) should tax anything that pollutes, so that ecological materials could be more affordable & used by people ! just an example : plastic glasses, forks or plates … I think we live in a complete hypocrite society, barely trying to be green !!!Another example ? The latest Copenhagen eco meeting !!
I'm barely out of subject …. or not ? ;o)
You hit the nail right on the head David. A pigovian tax is meant to cover the excess costs certain goods have on society that are beyond what we actually pay for them. Disposable cutlery and paper plates are an excellent example of something that is inexpensive for us to buy, but harder for us to get rid of afterwards. So taxes on these types of products would definitley be something to consider in an attempt to discourage consumers from buying them.
I think I want to unfortunately chime in here (and its too early to make a full argument – so this is at most a soundbyte). As much as Im for preserving the planet and making hazardous things more costly for business so they may offer affordable greener alternatives…in one way or another the cost will always be passed on and marked up to us consumers/taxpayers. My problem with eco fees/taxes is that they're charged usually after sale (at varying degrees) – so you dont see them till after you go to buy them (either in the store or online). If they were itemized on the price tag or was some sort of percentage – then we could make more informed choices on what to buy as we'd know the true cost of something – particularly items on sale. I've bought LCDs thinking Im getting a deal only to be hit by a $10-15 eco fee after purchase – sometimes negating some of the savings…Ultimately I think Im driving to the point that the consumers/taxpayers should not have to be the ones who always get the cost passed on to them in such an underhanded way. And I think a lot of the furor isn't over the eco-fees themselves…but at the fact that people perceive them as yet another govt and/or corporate cash grab that will not go fully toward the green agenda. I personally hate it now that more money gets sucked out of my pockets (dont care how much – its the principle) in the name of saving the environment – when I know it wont all go there. If the income, sales, property and all the other bloody taxes I paid went to where its supposed to go – and to my understanding the green agenda should already be part of that – they wouldn't need to have me pay extra.