from the extant-dinosaurs-dealing-in-dead-dinosaurs dept.
Common Dreams reports
Governments are failing to properly tax fossil fuel consumption, with enormous environmental costs, the IMF reports.
The fossil fuel industry receives $5.3 trillion a year in government subsidies, despite its disastrous toll on the environment, human health, and other global inequality issues, a new report by the International Monetary Fund (IMF) published [May 18] has found.
That means that governments worldwide are spending $10 million every minute to fund energy companies--more than the estimated public health spending for the entire globe, IMF economists Benedict Clements and Vitor Gaspar wrote in a blog post accompanying the report (pdf).
[...]Subsidies occur in two ways, IMF Fiscal Affairs Department directors Sanjeev Gupta and Michael Keen explained in a separate blog post published [May 18]:"[Pre-tax]" subsidies--which occur when people and businesses pay less than it costs to supply the energy--are smaller than a few years back. But "post-tax" subsidies--which add to pre-tax subsidies an amount that reflects the environmental, health and other damage that energy use causes and the benefit from favorable VAT or sales tax treatment--remain extremely high, and indeed are now well above our previous estimates.
[...]If anything, the report's findings are "conservative", Steve Kretzmann, executive director of Oil Change International, told Common Dreams. "[It] doesn't include direct subsidies to fossil fuel producers, and it doesn't include things like the cost of military resources to defend Persian Gulf oil."
(Score: 2, Funny) by WillAdams on Tuesday May 19 2015, @06:23PM
If the oil companies get this money directly from the government, doesn't that mean that they are then able to charge that much less for their product? Making things such as heating oil and gasoline for commuting to work that much more affordable?
(Score: 0) by Anonymous Coward on Tuesday May 19 2015, @07:03PM
In theory.
But it also means they can take that savings and give it to shareholders and management.
I'm sure it is a combination of both. Guess where most of it goes?
(Score: 4, Interesting) by sjames on Tuesday May 19 2015, @07:07PM
For example, if instead of making gasoline 50% cheaper through the subsidies, you saw the full price at the pump and had a voucher for half your current annual use per year, you might re-consider the value of driving a Humvee 100miles a day to work even though financially your situation hasn't changed. Perhaps you'd choose a smaller car so your voucher would cover all of your fuel costs.
(Score: 2) by ikanreed on Tuesday May 19 2015, @07:11PM
Right, but if the government just yanked the subsidies today, you'd go crazy voting for the pro-subsidy people because of damn government meddling.
Well. Not you specifically. But "swing voters" would overwhelmingly do that.
(Score: 3, Interesting) by sjames on Tuesday May 19 2015, @07:34PM
Not if they got subsidy checks in the mail in the form of energy vouchers spendable on any energy bill including a solar installation.
That's a bit ugly, but it is probably the only way to begin winding the subsidies down.
(Score: 2) by ikanreed on Tuesday May 19 2015, @07:51PM
Oh, I didn't mean to imply it was an unsolvable problem.
I'm always down to listen to status-quo aware incentive shift programs. But they still get demonized as unnecessary taxes or entitlements in the public debate. A recent example being cap and trade carbon limitting programs. Very quickly labeled "cap and tax" by the absolutely-no-addressing-problems-allowed crowd.
(Score: 3, Informative) by frojack on Wednesday May 20 2015, @04:26AM
There are a lot of myths about the Subsidies that the US pays to oil companies.
Some are explained in a rather balanced way in this Forbes [forbes.com] article. Another take is here, which is largely the same [mic.com].
TLDR: In the US the biggest subsidies to big oil are not what you probably think they are. They are mostly indirect subsidies. The largest is keeping the Strategic Petroleum Reserve and the Low Income Home Energy Assistance Program (LIHEAP - Also fund air conditioning for the poor, both essentially welfare, and all the money ends up in one energy company or another). These two account for about 40% of the subsidies provided by the US. Did you know Citgo (Venezuela ) pays huge amounts of LIHEAP funds to American Indian tribes and Alaskan Natives? Very strange, but true.
To this, if you add tax credits that any business can take. And some write offs allowed to farmers and other essential industry, purchases by the military, etc.
Direct payments TO big oil are dwarfed by revenue FROM Big oil.
Those things that are DIRECT are such things as Depletion tax credits. And it is also taken by mining (gold, iron ore, etc., but mostly Oil and Gas.
No, you are mistaken. I've always had this sig.
(Score: 3, Informative) by Thexalon on Tuesday May 19 2015, @09:08PM
That's only part of the problem. The other distortion in the market is that because, say, half the cost is something you pay whether or not you purchase oil-based products, it means urban folks who use public transit or travel on foot are paying for rural folks' gasoline.
The only thing that stops a bad guy with a compiler is a good guy with a compiler.
(Score: 3, Insightful) by aclarke on Wednesday May 20 2015, @01:08AM
True, but it's the "rural folks' gasoline" that is growing food so the urban folks don't starve to death.
We're both simplifying a complex problem. Believe me, I'd love to take a bus more, if the closest bus stop wasn't about 15km away. On the other hand, I work from home so I still likely burn less fuel than an urban commuter on a bus or train. When I do drive, I drive a diesel truck, but that truck was also hauling firewood earlier this evening, which is hard to do with a Prius.
In the end, I'm all for counting in the currently externalized costs of fossil fuel.
(Score: 1, Redundant) by Anonymous Coward on Tuesday May 19 2015, @07:22PM
HAHAHAHAHAHAHhahahahahahahahaha, AHHAHAHAAHAHAHAHahhahahahah! BAHAHAHAHAHAHAHAHAHAHAHAHAHHAHHAH!!!
(Score: 4, Insightful) by kaszz on Tuesday May 19 2015, @06:24PM
Suppose public transit would charge the full cost of passengers. Then people would clog the roads with more cars and travel less which perhaps costs more than the subsidy in lost tax revenue and GDP would probably also take a dive. So subsidies are not always straight forward. There's synergistic effects, feedback loops, game theory etc. Thus if you mess with it, the end result may be worse.
(Score: 2) by Jeremiah Cornelius on Tuesday May 19 2015, @06:31PM
That old sayin them that's got are them that gets
Is somethin I can't see
If ya gotta have somethin
Before you can get somethin
How do ya get your first is still a mystery to me
You're betting on the pantomime horse...
(Score: 0) by Anonymous Coward on Tuesday May 19 2015, @11:36PM
You're either born into it, or you find a way to convince someone or some group to give you theirs. I watch a multimillionaire receive taxpayer gifts of millions of dollars a year, pocketing record profits for himself, and then he demands his staff work harder for the same cash they already had.
(Score: 3, Interesting) by VLM on Tuesday May 19 2015, @06:42PM
environmental damage—including global warming, local pollution, traffic congestion and accidents—from energy consumption is just as real as are traditional supply costs (even if harder to measure) and the prices that consumers pay should reflect these negative “externalities.”
Basically they want them to pay twice. Because the consumers are already paying those costs directly, and its not like the government is every going to step in and pay those expenses for me anytime soon.
So for example, if air pollution from gasoline I buy causes $10 of health damage per year, they want me to continue to pay the $10 I/we are already paying for health care AND also pay the .gov an extra $10 annually in additional taxes on gas for them to do... nothing, I presume.
Their argument is sound although phrased really weirdly in terms of subsidies and stuff, but it boils down to the energy companies are in the good ole american business model of socialize the losses and privatize the gains, its just the IMF thinks it would be great to skim off some taxes because hey why the heck not, .gov can always find a way to spend some money.
it doesn't include things like the cost of military resources to defend Persian Gulf oil
It seems a simple line item to categorize and account for and pay up. Take the DOD percentage of budget spent in the M.E. times the total budget and divide that total cost of oil by the number of imported barrels of oil and slap a simple excise tax on each barrel. This might be an admission that even if the M.E. was oil-free we'd still be doing whatever Israel tells us to do in our position as their client state, so pretending its all only about the oil yet not accounting for it, is overall good P.R. They said "invade Iraq" we said "yes sir" and it doesn't much matter what it costs or how much oil we import, we're still gonna do what they say, when they say it, and how they say it, until they say "stop".
(Score: 3, Insightful) by hash14 on Tuesday May 19 2015, @10:41PM
Basically they want them to pay twice. Because the consumers are already paying those costs directly, and its not like the government is every going to step in and pay those expenses for me anytime soon.
I'm not sure I completely agree with this, assuming I'm understanding your argument correctly. If we take an example: the person who moved into the city to reduce his work commute suffers additional health effects from burning fossil fuels (increased respiratory problems, reduced air quality, higher temperatures, etc.) - it's like that person is being charged twice. Or we could consider someone who lives by a shore and doesn't use any carbon emissions at all, but has to pay for flood damage and eventual eviction. These people aren't necessarily causing the problem, but they pay disproportionately more for its effects.
I know that it's not really practical to exactly quantify the amount of harm caused by burning fossil fuels, but ultimately, the environmental damage is caused by people who are burning the fuels, and the best way to make them compensate for that is by taxing its usage.
(Score: 2) by aclarke on Wednesday May 20 2015, @01:43AM
Well said. The first link reports that China is contributing $2.3 trillion of the $5.6 trillion annual estimate. However, this is a simplistic view of the issue, as obviously the rest of the world is outsourcing our dirty work to China. So really, it's we who are polluting in China, helping to cause those estimated > 1M premature pollution-related deaths per year in China.
I've lately been trying to think through a potential solution that would involve an environmental levy on imported products. The levy would attempt to quantify the environmental cost of the product and then apply that to the product upon import. That money collected would then be placed in an environmental cleanup fund or something, rather than simply being used to fund the government. The problem is that in a global economy there are too many leaks. For example, here in Canada you'd just get people driving over the border to the US and smuggling goods back without paying the levy. However, if it could be properly applied it would significantly level the economic field between locally produced and imported items, as well as providing an incentive for companies to produce items in an environmentally friendly fashion and for countries to clean up their act and tighten their environmental regulations.
(Score: 2) by VLM on Wednesday May 20 2015, @11:46AM
These people aren't necessarily causing the problem, but they pay disproportionately more for its effects.
Yes we are in agreement so far, and extending your example into the implementation era, the total cost of public victimization divided by the number of residents works out to $1K/yr (just to make the math easy), which they are currently paying. So the .gov will "helpfully" tax everyone an extra $1K/yr for a total loss of $2K/yr, because they got guns and we don't and the only moral doctrine we operate under is "might makes right" (there seems to be no moral, ethical, or technological argument behind it other than "you have money; we have guns; so we can take your money; say bye to your money"). At that point the residents of the city are $2K/yr poorer, and because we have a failed state of a government, any money it gets will lower the standard of living rather then increase it, so they buy the cops more guns to shoot kids in the back with, or invade yet another helpless country, or whatever other stuff you see in todays headlines just more of it.
So if its not implemented, the city residents on average are $1K/yr poorer, and if we do implement it, the city residents on average are more than $2K/yr worse off. So I'm not exactly looking forward to this.
Is there any other realistic, fact based, historically likely outcomes of the proposal other than making the poor bastards who are currently suffering, suffer even more?
Another aspect that burns me, is the institutionalization and codification and respect of stupidity. You don't want to get flooded by the river, try not living on the river bank. Tired of having to work harder to bail out idiots. Don't care if the river floods once a decade due to mother nature or twice a decade due to man made global warming, what I'm tired of is handing out money to morons repeatedly. You wanna drown? Go ahead, build there, that's a great place to drown. Just stop asking me for money over and over and over and I'm fine with that. You wanna stop being $1K/yr poorer, stop living on a river bank that floods all the time instead of proposing some ridiculous sin-tax scheme that won't do anything anyway because the idiots will still be living on the river bank that floods, they'll just be a little poorer.
(Score: 4, Insightful) by Kromagv0 on Tuesday May 19 2015, @07:02PM
I have always hated the kind of thinking used in these types of stories. Because when someone says something not being taxed means it is a subsidy seems to mean someone has a political ax to grind against specified industry. Similar logic is used in this NY Times interactive article to come up with the cost of 9-11 at about $3.3 trillion. The same logic would be that the state of Minnesota subsidizes my food and clothing purchases because they are not taxed. Now how silly does that sound?
T-Shirts and bumper stickers [zazzle.com] to offend someone
(Score: 3, Insightful) by Anonymous Coward on Tuesday May 19 2015, @07:06PM
The same logic would be that the state of Minnesota subsidizes my food and clothing purchases because they are not taxed. Now how silly does that sound?
If they taxed everybody else for their food and clothing it would sound 100% serious.
(Score: 4, Insightful) by hojo on Tuesday May 19 2015, @07:32PM
No, it would still be wrong.
If I hit almost everyone I pass with a baseball bat, but skip the blondes, this does not represent a subsidy to the blondes. Lack of harm does not equal encouragement.
(Score: 2, Touché) by Anonymous Coward on Tuesday May 19 2015, @07:52PM
It is messed up that you equate paying for national infrastructure with hitting people with a baseball bat.
(Score: 3, Insightful) by mhajicek on Tuesday May 19 2015, @09:10PM
The difference between extortion and involuntary taxation is.. Wait, there's a difference?
The spacelike surfaces of time foliations can have a cusp at the surface of discontinuity. - P. Hajicek
(Score: 0) by Anonymous Coward on Tuesday May 19 2015, @10:04PM
> The difference between extortion and involuntary taxation is..
Extortion doesn't pay for the infrastructure you depend on to live.
Nobody on soylent is under 30 years old and yet teenage logic is still de rigueur.
(Score: 2, Troll) by mhajicek on Wednesday May 20 2015, @02:35AM
You pay the mob, you get "protection". It's pretty much the same. The percentage of tax money that actually goes to infrastructure is statistically insignificant.
The spacelike surfaces of time foliations can have a cusp at the surface of discontinuity. - P. Hajicek
(Score: 0) by Anonymous Coward on Wednesday May 20 2015, @03:02AM
> The percentage of tax money that actually goes to infrastructure is statistically insignificant.
Only if you cherry-pick the most narrow possible definition of infrastructure.
(Score: 0) by Anonymous Coward on Wednesday May 20 2015, @05:59AM
(Score: 0) by Anonymous Coward on Tuesday May 19 2015, @10:04PM
It's not involuntary, you can totally pick up and move to another country whenever you like.
What? You don't have the money for international travel? You should have thought of that before being born poor.
(Score: 5, Insightful) by aristarchus on Tuesday May 19 2015, @10:09PM
The difference between extortion and involuntary taxation is
liberty, freedom, democracy. You see, you agreed to be taxed when you agreed to abide by the decisions of the legislature and courts of your unfortunate nation. ("God pity the nation that has libertarians", I think the saying goes.) Now just because you might happen to disagree with the majority decision on such policy, that does not mean you are being forced to pay taxes. You have a choice! Pay your fair share, as determined by said political process; change the policy by convincing enough of your fellow citizens to do so; or leave. I hear that the libertarian paradise of Somalia is wonderful this time of year!
But the other equivocation here is that not taxing is not the same as subsidy. Of course it is. If a tax is a fair policy, it will be fairly applied. Now this does not mean something as moronic, or Steve Forbesian, as a flat tax, but it does mean that were some citizens have a lessened tax liability, that must be compensated by some other social good. In other words, they are being subsidized by paying less in taxes because we as a society think that that money is better utilized by the subsidized entity. Religion is subsidized in many nations. Charity, education, medicine, and so on. And the petroleum industry. Any business should pay the same tax as any other, unless there is some good reason to diverge from equality. So what was (I am assuming there was one at some point) the social good provided to the nation by the oil business that justified the subsidy?
(Score: 1, Insightful) by Anonymous Coward on Tuesday May 19 2015, @10:54PM
(Score: 3, Insightful) by aclarke on Wednesday May 20 2015, @01:26AM
You're asking the wrong questions. In both cases, there is an involuntary, forced cost. You seem to be focusing on the costs of following the IMF's policy recommendations so I'll discuss the costs of sticking with what we have.
You, I, and pretty much life form on this planet for the next few thousand years will be paying a price for the carbon and other toxins we are dumping in the air. If I, for example, wish to opt out of this and live in a hut and subsist on scavenged berries, I could still very well suffer from a pollution-induced respiratory illness. That is an "involuntary taxation", to use your terminology.
We often don't ascribe a cost to the status quo, because this is how we've lived our entire lives and we just don't see the costs. We've learned to accept them, work around them, or assume that they're a requirement and that we have no better choice. We don't want to change until everyone else does because we perceive that to be the first to change would put us at a disadvantage (game theory). Maybe we are entrenched in a political ideology that has a vested interest in keeping things as they are, because change is scary.
If you look at only the costs of changing, and not the costs of not changing, that's not a fair equation. The point of this report is to attempt to quantify the costs of not changing.
(Score: 1, Interesting) by Anonymous Coward on Tuesday May 19 2015, @10:10PM
If I hit almost everyone I pass with a baseball bat, but skip the blondes, this does not represent a subsidy to the blondes. Lack of harm does not equal encouragement.
This is playing word games. It wouldn't represent a "subsidy" only because it doesn't involve money. It does represent a benefit to them. The status quo is "hit with a baseball bat" but if you are blonde then you can walk around without fear of that and have better freedom of movement, less pain, etc. A more concrete example would be in Saudi Arabia where only men are allowed to drive. Are you really arguing that men don't have it better than women in this case because they merely have a lack of harm but not real benefit?
Taking this back to economics, though, let's say I give all blondes $500. I'm sure you would say that would benefit blondes. Now let's say I take away $500 from everybody except blondes. That would still benefit blondes, as each dollar would buy more due to there being less cash in the economy (read: deflation) and each dollar buying more. It's of course "more complicated than that," but the general idea holds.
Here is another example which may make more sense to you. You can tax deduct (read: "not be hit with a baseball bat") for charitable contributions... do you really think everybody would be donating as much clothing, money, and everything else if they did not get that tax benefit for doing so?
(Score: 2) by FatPhil on Wednesday May 20 2015, @12:02PM
If the two are really different, perhaps you can tell be the value of x for which f(x) and g(x) are different here:
f(x) := 0 if (x \in subset), else tax.
g(x) := tax - g'(x)
g'(x) := subsidy if (x \in subset), else 0
where subsidy == tax.
If two functions are identical everywhere, then they are the same function.
Great minds discuss ideas; average minds discuss events; small minds discuss people; the smallest discuss themselves
(Score: 1, Interesting) by Anonymous Coward on Wednesday May 20 2015, @02:50AM
From http://lessgovletsgo.org/?page_id=98 [lessgovletsgo.org]
"Basically, a government would collect a tax on sales of energy, then monthly rebate equally to taxpayers the average amount of tax collected. This policy would reward those who consumed less than the average amount of energy, and discourage consumption of higher-than-average amounts of energy.
"As shown below, Wilson presented this novel idea in a number of places in the 1970s, to encourage governments to use this idea. Unfortunately, beginning in mid-December 1973 and continuing today, a number of people advocated this idea as their own, without properly attributing the idea to Wilson. ..."
More recent versions don't call it a tax, since the money goes to a trust fund that holds the money briefly, until the rebates are distributed. Lots of interesting side effects, for example, the rebates go to citizens -- cutting out illegals.