Next wave of tax reforms should be green
An article by Kerryn Wilmot, appeared in
<i>The Age</i> on 8 May. Kerryn is Treasurer of
the <a href=http://www.ptua.org.au/>Public
Transport Users' Association</a>

See <a href=http://www.theage.com.au/news/business/the-next-wave-of-tax-reforms-should-be-green/2006/05/07/1146940410090.html>The Next Wave of Tax Reforms Should be Green</a>.
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It's high time for measures that encourage energy efficiency and make
polluters pay the full cost of their damage, writes Kerryn Wilmot.

Australia doesn't just need tax reform; it needs ecological tax reform.

Treasurer Peter Costello is presumably relaxed and comfortable with the 
recent tax inquiry's finding that Australia is a low-tax country.

While the report has done little to quell calls from those paying the top tax
rate to lower the tax rate, the Federal Government appears afflicted by reform
fatigue, at least over reform of the tax system.

On one hand we have commentators raising expectations of tax cuts in the
federal budget, while the Treasurer warns of the economic downturn that will
accompany rising oil prices and the inevitable end of the mining boom. What
we're not hearing, on the other hand, are serious proposals for how an
ostensibly low-tax country should pay for fiscally responsible cuts to 
income tax.

An overlooked section of Dick Warburton's tax report provides clues. 
According to the report on comparative taxation, Australia has among the lowest 
levels of fuel taxation in the developed world and negligible taxation on other
activities that damage the environment. So we shouldn't be surprised that
Australia, one of the most urbanised nations, has among the highest levels of
car ownership, per capita petroleum consumption and greenhouse emissions. 
Not only do taxes on "dirty" activities offer an opportunity to cut taxes on
employment and other benign activities, they also offer efficient price
signals that can place the economy on a more sustainable footing.

The opportunities for reform don't stop at raising taxes on activities that
damage our environment. For example, current fringe benefits tax rules
actually encourage unnecessary driving through the innocuously titled
statutory formula. It adds to peak-hour congestion, air pollution and oil
depletion, and its cost to taxpayers is advancing towards $1.5 billion a year:
enough for a monthly public transport pass for every man, woman and child in
the country. Elimination of this perverse subsidy, as called for by Federal
Parliament's Sustainable Cities report, would contribute to more liveable
urban centres, and release funds for more socially and economically 
beneficial programs or tax cuts.

The opportunities for ecological tax reform are extensive: removing import
tariff advantages for imported Toorak Tractors; eliminating concessions for
covering land in concrete upon which to park cars; putting a price on
burgeoning emissions of greenhouse gases; and calculating registration 
charges based on the amount of road use or fuel efficiency of the vehicle.
They offer the potential to lower effective income tax rates while making 
environmental destruction less financially attractive.

The economic case for ecological tax reform is strong, but ultimately it's
bigger than just the economy. The chief executives of some of Australia's
biggest companies recently called on the Government to get serious about
climate change before the cost of inaction becomes too great. Families pay 
the increasing daily price of our economically, socially and environmentally
unsustainable addiction to oil. Cities are grinding to a halt under the weight
of traffic while governments at all levels pay lip service to public
transport. Each of these problems has at its heart a tax system that rewards
damage to the environment and inefficient resource use.

With predictions of a global peak (then decline) in oil production within the
next decade, this is a time for tax reform that strengthens incentives for
energy efficiency and innovation, and makes polluters pay the full cost of 
the damage they do to our children's planet.
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