Cameron Wigmore, Green Party Member: Building the Green Economy

December 14, 2007

Building the Green Economy

I will be posting a series here over the next few months covering different parts of the Green Party of Canada's Vision Green document. The first section I'd like to explore is called Building the Green Economy.

Economics is a subject that is tied directly into the environment. For many decades the field of economics has failed to recognize that our economy is a subset of global ecological systems. Instead, economists have traditionally looked at the environment as something to be values and consumed in the pursuit of economic prosperity; the environment, along with everything else, has been viewed as a subset of the economy.

The logical errors in that outdated model are now becoming readily apparent: as we degrade and consume ecosystems, we pay dearly for the loss of that 'natural capital'. Take the example of how New York City chose to implement a comprehensive watershed protection program to preserve and restore natural filtration services as a more cost effective means of maintaining water quality than water treatment. Here's another link to info on this example. This outside the box thinking is slowly being adopted by economists and some governments, but not many, and certainly not fast enough.

Now past the point of global sustainability, our resource consumption under an economic growth model is becoming a dangerous and obviously outdated model. It was Walter Bagehot who said, "The whole history of civilization is strewn with creeds and institutions which were invaluable at first, and deadly afterwards."

The following selected text excerpts are from the Vision Green introduction on a green economy.

The Green Party approach is to think holistically. How can we achieve the best possible economic result? What are the fiscal and regulatory impediments to economic sustainability?

With the U.S. our largest trading partner, how can we maintain a healthy economy without surrendering our sovereignty and becoming subsumed into the U.S. orbit, as contemplated by the so-called Security and Prosperity Partnership?

We strive for stronger local economies with a small business focus, increased national and regional self-sufficiency, economic diversification, more “fair” trade, more value-added manufacturing of resources, more green-certified production and a rapid shift to more renewable energy to create local economic opportunities.

This generation has the potential to capitalize on the single biggest business opportunity in human history – the shift to a low-carbon economy. Whether this is driven by high energy prices, dwindling oil supplies, strategic geo-political threats to foreign oil, the climate crisis, or all of them combined, the country that mobilizes resources to develop and commercialize low carbon technologies (e.g. alternate fuels, renewable energy and energy efficiency) will survive the price shocks of fossil fuel’s last gasps and emerge with a thriving economy. Canada should be that country.

It makes no sense to subsidize the wealthiest companies on earth to make the world’s most profitable product -- a barrel of oil. These perverse subsidies must be removed. It makes sense to reduce taxes on things we want – income and employment – while increasing taxes on things we do not want, like greenhouse gases and pollution that causes smog.

Canadian businesses want two things from their government: predictability and policy coherence. The Green Party government will ensure that the rules are clear, the playing field is level and decision-making is transparent.

Our fiscal plan is straightforward: Use the tax system to help meet societal and ecological goals. Get the prices right. Allow business to pursue profit, with clear signals of environmental and societal objectives.

Canada and the world community face an environmentally linked, energy challenge of historic proportions over the next few decades. The reality of rising fossil fuel prices, increased losses due to extreme weather events caused by the worsening climate crisis, higher global temperatures and worsening pollution levels will make mitigation and adaptation responses absolutely essential. Focusing community economic development and investment towards clean technology and services is both a smart economic development strategy and a superb investment opportunity.

Green technology has been called the greatest business opportunity of this century. All levels of government need to advance this green economic approach through effective tax and policy measures and appropriate skills and trades training at the secondary and post-secondary levels.

As part of the federal government’s contribution to advancing this green economic vision, the Green Party of Canada government will gradually and progressively shift current consumption taxes onto products and services that harm people and the environment while reducing taxes on income, products and economic activities that do no harm. This "green tax shift" will be largely revenue neutral, meaning that as certain taxes increase, other taxes will decrease. In particular, income and payroll taxes will decline. And because the Green Party is committed to eliminating poverty it would ensure that this tax shift would not unfairly burden less fortunate members of our society.

By moving to "true" or "full-cost” accounting, whereby products and services are priced according to the positive or negative impacts they cause throughout their lifecycle, our society can make rational market choices that will guide the economy toward environmental sustainability.

The Green Party believes in reforming our tax system to make it fairer and more in tune with Canadians’ desire for a healthy environment, a sustainable economy and a vibrant, caring society.

It makes no sense to subsidize the wealthiest corporations on earth – the oil companies. We must remove these perverse subsidies immediately, not in the slow, “grandfathered” approach of the Conservatives’ 2007 budget.

The Green Party will reduce taxes on things we all want, like income and employment, and we will increase taxes on things we do not want – things that harm people and our environment.

Our "green tax shift" will be progressive, with a schedule that gives industry time to gear up or down. And it will be revenue neutral because a tax shift is not a tax grab. Income and payroll taxes will decline and the changes will help, not hurt, less fortunate members of our society.

To shift taxes effectively, we have to change to a "true" or "full-cost” accounting method that incorporates economic, social and environmental costs and benefits in the national accounts. Using this method, products and services are taxed, and thus priced, according to the positive or negative impacts caused throughout their lifecycle. We have already done this with tobacco products. Such taxes help consumers make more rational choices.

There are other ways to put taxes to work improving our society. Our tax system must be designed to reduce poverty, encourage environmentally beneficial activities and generate more wealth for the 90 percent of Canadian families who are currently working harder without getting further ahead.

The Green Party’s fiscal plan is straightforward: gradually reduce our debt, give clear tax signals that enable companies to pursue profits on a level playing field, and shift taxes to ensure that both revenue streams and expenditures meet social, economic and ecological goals.

For more, including specific action items, see the full text here.

Click here to see all of my blog posts related to economics.

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