States with environmental funding stretched thin are increasingly
turning to environmental taxes to protect their natural resources while
generating revenue.
In years past environmental protection was
largely enforced through regulations that set baseline
standards of environmental quality. As power devolves from
the federal government, states are looking for new ways that
accomplish the dual goals of stimulating economic
growth while protecting the environment.
"In 1970 environmentally
motivated tax provisions were virtually unknown at the
state level," notes Andrew Hoerner of the Center for a Sustainable Economy.
"Today only five states have fewer than five such provisions and 21 states have
10 or more." Hoerner’s white paper, Harnessing the Tax Code for
Environmental Protection: A Survey of State
Initiatives, outlines various mechanisms states
have in place to protect the environment.
Severance taxes, which charge
those extracting resources, have provided a steady
income for states which have heavy concentrations
of coal, oil or minerals.
"Montana’s coal severance tax serves as
a solid source of revenue for us," commented Montana
state Representative Emily Swanson (FF `95). "Fifty percent of the tax goes toward
a permanent fund which has reached $600 million. The permanent fund finances infrastructure projects and
interest earned is earmarked for the general fund."
Similarly, Connecticut’s oyster
tax has bolstered the local shellfish economy while helping ensure the
replenishment of a natural resource on which parts
of the state are economically dependent. Connecticut imposes a seed oyster
tax on the retail value of oysters harvested from state shellfish grounds. The
tax provides funds to continue seeding oyster beds, which helps sustain the
oyster population and strengthens Connecticut’s fishing industry.
Businesses also stand to
benefit from environmental taxes. Some states rely more heavily on pollution
taxes than income taxes, for example; businesses there can save money by
tightly controlling their polluting emissions and paying lower income taxes on
their profits.
For more information on
state environmental taxes, visit the Policy Resource Page on CPA’s website,
http://www.cfpa.org/programs/plan/pr-index.html.
| There are 462 environmental tax instruments in the states.
Of these…
- 211 are trust fund taxes (taxes with revenues earmarked to
environmental purposes)
- 216 are tax incentives (provisions to promote cleaner ways of
doing business)
- 35 are trust fund taxes without specific revenue allocations
Source: Harnessing the Tax Code for Environmental Protection: A Survey of
State Initiatives, Andrew Hoerner. |