Essay
Taxation can be a highly controversial topic among many people, not just politicians. Especially when taxes are aimed at big corporations that make substantial income. However, the bill I am proposing only pertains to corporations that have at least one delinquent pollution control violation as determined by the Pollution Control Agency, as certified by the commissioner of revenue. The United States Environmental Protection Agency (EPA) discusses two methods used by policymakers to curb behavior: the first being traditional regulatory approaches, or using economic incentives / market-based approaches. Though there are cons discussed by the EPA for how taxation can be ineffective, it can also create an incentive for corporations to put even more effort into finding solutions when faced with extra taxation. Brookings also introduces the idea that treating the environment as a private good can be an advantage, as the government can set a price on it. Economist Arthur Cecil Pigou from the 1920’s “believed that negative externalities caused by market interactions justified government intervention. And he showed that the way to reduce damaging externalities was for government to tax the activities leading to them, based on the amount of damage they caused — thereby giving offenders very real, material reasons to cut back on their harmful behavior” (Gayer 2011).
While the idea of taxing corporations that contribute heavily to pollution can be an effective idea, there can also be ways that show it might not be the most effective method to curb pollution. For example, a study conducted by Simin Shen and Liang Wang to analyze the impacts of China’s adoption of the environmental protection tax (EPT) showed that there can be a “substantial negative impact on pollution-intensive enterprises, as indicated by negative correlations in the stock market” (Shen and Wang 2024). However, scholars have yet to reach a consensus on whether EPT policy enactment improves or reduces enterprise performance, with most studies focusing on a micro-level performance. With this in mind, economic impacts from pollution taxation should be studied more before dismissing the positive impacts that could come from implementation. Earth.org also introduces some cons of introducing a pollution tax, such as it will create little change to the overall global pollution rate, as bigger countries are still producing significant pollution, it may encourage corporations to move their operations, and a high price may encourage tax evasion or even hide their true carbon emissions. Despite criticism, there have been other countries that have been highly successful in taxing pollution. For example, in 2008, British Columbia, Canada, introduced a charge on Carbon and in the first four-year fossil fuels had been found to have decreased by more than 17%. All of this shows the importance of discussing different ways to protect the environment for future generations, and a pollution control surcharge could be the solution.
Sources (descending order of reference)
https://www.epa.gov/environmental-economics/economic-incentives
https://www.brookings.edu/articles/pricing-pollution/
https://pmc.ncbi.nlm.nih.gov/articles/PMC11089306/