Thursday, April 16, 2009

Scrap the VAT, introduce the PAT

A cargo shipI was tweeted this link yesterday: Health risks of shipping pollution have been 'underestimated' | Environment |

Confidential data from maritime industry insiders based on engine size and the quality of fuel typically used by ships and cars shows that just 15 of the world's biggest ships may now emit as much pollution as all the world's 760m cars. Low-grade ship bunker fuel (or fuel oil) has up to 2,000 times the sulphur content of diesel fuel used in US and European automobiles.

The fuel oil (bunker fuel) used by those sea-going levihathans, just like kerosene (the airlines fuel) are not taxed, as opposed to petrol and diesel used by cars. Ironically, cars have become much cleaner, even diesel with new particulate filters -although they're not quite ubiquitous yet.

My conclusion is simple: our government is taxing automobilists and smokers not for health or environmental reasons, but simply because it can. Taxing foreign ships and plane is more difficult but not less harmless.

How to solve this?

I've been wrestling with that idea for a while: it's difficult to tax things that don't fall under a national law. The current system to tax CO2 emissions for instance is profoundly injust as I put it above, and it misses the point as housing for instance is not taken into account. It also favours displacing CO2 emitted by post-industrial countries to developping countries who use old generation coal stations.

One thing that could be taxed is the good when purchased. So what I propose is replacing the VAT with a variable tax based on CO2, NOx and other harmful compounds "embedded" (in reality emitted during the manufacturing process) in the products we buy.

That would be a PAT: Pollution Added Tax.

I can only see benefits: it would give everyone an incentive to be more sustainable, and create a lot of jobs because it would be quite complicated to administer.

But my PAT would be a great way towards more GloCalisation.

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