Review of Western Australian State Taxes 1994 - Chapter One - Environmental Taxes

Abstract

Western Australia does not currently impose environmental taxes but instead utilises a system of regulation and penalties. The Chapter examines policy considerations relating to the use of environmental taxes for revenue-raising purposes or as a mechanism of environmental control. Discussion in the Chapter is limited to controlling air pollution caused by industry -- specifically, carbon and sulphur emissions. The primary purposes of environmental taxes are cited as pollution control (to encourage polluters to use the best methods of pollution control possible) and as a deterrent to pollution activities. Environmental taxes are also assessed in terms of equity, efficiency and simplicity and the authors conclude that it is difficult to satisfy all three criteria simultaneously and, therefore, it is inappropriate to use environmental taxes for the achievement of environmental protection aims. The Chapter then considers non-tax alternatives for environmental protection aims and their attendant advantages and disadvantages. Attention is also given to the legal and jurisdictional difficulties with the implementation of an environmental tax, including the limitation imposed by s. 90 of the Commonwealth Constitution, which gives the Commonwealth Government exclusive power to impose excise duties (duties on goods). The Chapter concludes that the best solution would be the use of both taxation and non-tax (tradeable rights and environmental standards) approaches, with the resulting revenue being directed to environmental protection.

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