AMERICAN-STATESMAN STAFF
Thursday, April 22, 2004
With Gov. Rick Perry pushing "sin taxes" on cigarettes and topless
bars to help finance public schools and cut property taxes, Rep. Lon Burnam is
betting the time might finally be right for taxing another type of common Texas
transgression: pollution.
The Fort Worth Democrat, whose prior efforts to enact a tax on coal were
virtually ignored by legislative leaders, on Tuesday introduced bills projected
to raise $1.2 billion per biennium for Texas schools through new taxes on coal,
electric power plant pollution and sales of high-polluting vehicles that have a
low mile-per-gallon rate.
"In this special session we are not in the same situation as before,
when the leadership wouldn't consider new taxes," Burnam said. "With
the focus on sin taxes, I'm proposing we also tax those who sin against the
environment and public health."
Like taxes on cigarettes and alcohol, levies on pollution are intended to
discourage destructive behavior while reimbursing society for some of the
economic and social costs. Such taxes are widely used in Europe, and in a few
states.
"When you consider the enormous health care costs . . . that Texans and
their government incur because of illnesses related to air pollution, making
consumers and businesses that pollute pay a portion of the costs of our public
schools is fair and is just good economics," said Cyrus Reed, director of
the Texas Center for Policy Studies.
Texas currently imposes a severance tax on oil and natural gas, but none on
coal, which is much more polluting. Under Burnam's proposal, the 100,000 tons
of coal burned in Texas annually would be taxed at the same rate as natural
gas, or 7.5 percent of its value.
Burnam would also tax power plant emissions of nitrogen oxides, which help
form lung-damaging ozone pollution, at 60 cents per pound of pollution. His
staff estimates that power companies would pay about $700 million in added tax
every two years and charge their customers an extra $1.30 per month. But most
electric consumers now have the option to switch to electric providers that
generate power from renewable sources, such as wind turbines. Those power
providers would not be taxed.
The added sales tax on vehicles would impose a surcharge of 1 percent for
those whose emissions are more than three times the mandatory average for a
carmaker's line and another 1 percent for vehicles that get less than 14 miles
per gallon. The vehicle sales tax is currently 6.25 percent.
The buyer of a high polluting sport-utility vehicle or large pickup that has
a low mile-per-gallon rate and costs $30,000 would pay an added $600 in sales
tax at the 8.25 rate, while such a vehicle that exceeds just one of the two
criteria would cost an extra $300.
The taxes reward power companies that use or switch to cleaner fuels or have
more advanced pollution controls and consumers who purchase low-emission
vehicles that get good mileage, Burnam said.
The concept of such taxes is not considered far-fetched, at least not
outside Texas.
About 2,500 economists, including eight Nobel Prize winners, have endorsed
shifting from income or property taxes to surcharges on polluting activities or
fuels. The proponents of such tax shifts include N. Gregory Mankiw, chairman of
the President's Council of Economic Advisers.
Texas is the only major coal-producing state besides Pennsylvania that does
not tax coal, which accounts for about 85 percent of air pollution from power
plants in Texas. West Virginia and Kentucky each collect about $160 million
though coal taxes, and Wyoming brings in $100 million annually.
Comptroller Carole Keeton Strayhorn contends Perry's plan to cut the school
property taxes would create a $10 billion deficit over five years. That means
legislators may need to look elsewhere for additional revenue, perhaps giving
Burnam's proposals a chance.
Perry's office did not respond to a call Wednesday for comment about whether
he might consider pollution taxes to help finance schools.
kcarmody@statesman.com; 912-2569