Why taxing polluters is the most efficient way to reduce pollution (of all sorts)
Markets frequently do not take into account the true cost of goods and services; for the environment, this means ignoring damage done by air pollution, acid rain, devastated ecosystems and climate change is not factored into the cost of polluting. By not reflecting these costs, polluting seems cheaper than it actually is.
“The most effective way to correct this massive market failure is to restructure taxes–lowering taxes on income while raising those on environmentally destructive activities…. tax shifting helps make sure the price of products reflects their full costs to society,” according to treehugger.com.
The article suggests using the U.S. government study on smoking, where a tax was placed on cigarettes that reflected the calculated cost of treating health problems and lost worker productivity.
The full story with other examples of countries where this model has been applied can be found here.
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