Exposing Perverse Subsidies
“Subsidies for fossil fuels and nuclear power in just the United States are around 21 billion dollars per year. This is equivalent to 75% of the annual spending of the World Bank.”
Subsidizing the Bad
A powerful energy, agricultural, and chemical industry lobby maintains government subsidies and tax breaks for fossil fuel use, intensive agricultural and extractive systems, and untested, unregulated chemicals. Another reason governments give tax incentives to polluting industries is to create jobs. However analyses by some groups have shown that these tax breaks offer no net benefit to the community.
Example: Louisiana: Poor, Impoverished, and Polluted
In the 1990s, Louisiana, one of the poorest and most polluted states in the U.S., wiped off the books $3.1 billion in property taxes alone. In the past 10 years the state:
- Cancelled $213 million in industrial property taxes owed by Exxon Corp — in return, a total of 305 jobs were created;
- Eliminated $140 million in taxes owed by Shell Oil affiliates — in return, 167 jobs were created;
- Erased $103 million in taxes owed by International Paper — in return, 172 jobs were created;
- Voided $96 million in taxes owed by Dow Chemical Company — in return, 9 jobs were created.
The list could go on. In return, Louisiana has the highest toxic release inventory releases in the U.S., and among the highest income disparity between rich and poor. Louisiana industrial users also have the lowest energy costs in the country, while Louisiana residential electricity consumers have among the highest. An elimination of these tax breaks would allow the state to better fund schools and invest in environmentally friendly technologies, such as solar power.
Example: Using Good Subsidies
The Netherlands has financial incentives for clean technologies. Its tax breaks apply specifically to purchases of 400 or so technologies officially listed as cutting-edge, such as recycling devices for concrete, and machines that generate ozone for use as a chlorine-free bleaching agent in paper-making. When these become commonplace, they get bumped off the list by newer entries, thus creating a steady incentive to prod industry to develop cleaner production. In another ground-breaking step, the Dutch government now grants complete tax exemption for mutual funds that invest in green projects, such as wind farms and pollution prevention research and development.