Taxpayers are urged to improve the efficiency with which they use energy or to switch to renewable resources. Both actions would reduce their tax payments while at the same time enriching the overall economy. The issue of tax restructuring is already on the political agenda in Washington and in many states. Most tax reform proposals involve extending state sales taxes or imposing a national value added tax. Both of these are consumption taxes.
Pollution taxes are a form of consumption tax too.
But unlike broad sales taxes pollution taxes target only those activities that are socially harmful. They can and should play a role in any tax restructuring effort that involves consumption taxes. A number of states, including Minnesota, are seeking alternatives to local property taxes as a way to finance the public school system. In 1995 the Minnesota House of Representatives approved a state constitutional amendment that would require the state to finance public education. No economic analysis at the state level has yet occurred.