Tax Subsidies Don’t Protect the Environment

June 25, 2013 Taxation in USA

Northern (coal-fired power) power stationWASHINGTON D.C – The USA spends billions every year on tax subsidies aimed at reducing greenhouse gas emissions, and in some cases these concessions lead to an even higher production of greenhouse gases.

Late last week the US based National Research Council released a new report showing that the US tax code is ineffective at encouraging a reduction in the emission of greenhouse gases.

According to the Council, over the course of 2011 and 2012 the US government spent in excess of USD 48 billion on tax subsidies and allowances to encourage the uptake of green technologies in order to reduce the emission of greenhouse gases, however, these expenditures are a “poor tool for reducing greenhouse gases and achieving climate-change objectives”.

The results of the study also confirmed that in some cases the mistargeted concession have even resulted in an overall increase to the amount of greenhouse gases being emitted.

The Council suggested that the tax credits were ineffective due to the complexity of the US tax code, which depletes the positive effect of the allowances while making it harder to target tax concessions.

The results of the study showed that the most effective means of using taxes to encourage a reduction in greenhouse gas emissions is to implement a cohesive carbon tax system, which would directly target and penalize the production of greenhouse gases.

Photo by thoughtfactory