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Sustainable Economic and Tax Policies

Achieving sustainable production and consumption will require changes in the economic incentives that fuel the current economy. This group had a huge agenda to tackle in a brief amount of time. Many policy changes are necessary, including efforts to secure new indicators of economic progress; mechanisms to adjust product prices to reflect true environmental costs; the elimination of subsidies to ecologically destructive industries; changes in government procurement practices; and market incentives to reduce excessive packaging and waste.

The group chose to focus on ecological tax reform, in part because Presidential candidates and members of Congress are proposing various changes to the tax code. Possibilities include a flat tax, a consumption tax, and a national sales tax. The small working group perceived a strategic opportunity to introduce consideration of resource consumption and economic equity into the debate. The group agreed on the need to articulate and propose a tax shift that moves taxation away from labor and toward the use of resources.

Participants emphasized such a shift must enhance equity and employment while discouraging the use of natural resources. Several participants stressed the need to act quickly on this policy agenda. Some noted several organizations and individuals already working on eco-tax reform. These include the Institute for Ecological Economics, the Economic Policy Institute, Redefining Progress, the World Resources Institute, the Center for Global Change, Friends of the Earth, and the Natural Resources Defense Council. There needs to be greater coordination on this fundamental strategy for change. Participants cautioned, however, that advocates need to heed the lessons of the failed BTU energy tax initiative of 1993.

The key challenges facing this effort include: 1) the actual definition of a policy instrument that will result in reduced resource use, reduced environmental damage, and increased equity and employment; 2) an analysis of the key stakeholders who would be threatened by such a policy shift; and, 3) design of a sophisticated public education and political campaign to mobilize support for the policy change. (This discussion helped spawn a follow-up meeting on eco-taxes convened by Redefining Progress and the Wallace Global Fund in July 1995.)