An environmental tax to reveal the true cost of a product?

Sometimes simple acts like going to the supermarket can become a moral dilemma. Is it better to choose the organic piece of fruit produced on the other side of the country or the non-organic version grown locally, 50 miles away? Are the benefits of chemical free shampoo worth an extra 5 bucks a bottle? Will I really be able to enjoy a cheap chocolate bar knowing that the cocoa bean farmers probably didn’t get fairly compensated?

As much as I would like to say that I always buy the product that is environmentally safe and sustainably produced, in reality, that is not always the case. First, the sheer amount of information required to be able to distinguish between products is staggering. You need data on environmental impact, transportation costs, and fair business practices, to name just a few. And there’s plenty of misinformation and greenwashing campaigns out there to steer you in the wrong direction.

Second, of course, there are times when the high cost of an ethically made product prevents me from buying it. Even the best-intentioned consumers have their pain points.

The point is that companies that go out of their way to implement sustainable practices bear a higher cost of production. Sure, sometimes they can capitalize on this by marketing to conscious consumers who are willing to pay a little more, but the fact is that in the current system, environmentally conscious production is punished.

On the other hand, companies that relocate their factories (and jobs) to developing countries with lax environmental standards and cheap labor can make products at a fraction of the cost and undercut their competitors (while shipping materials and finished goods to all the world). and adding to our greenhouse gas problems).

The way it is set up, the high environmental standards in a country drive companies to relocate to places where it is allowed to pollute to compete in the market. Chaco, the Colorado-based athletic sandal company, is a prime example of how even a well-intentioned company is forced to do the same to maintain competitive prices on its products. In fact, 95% of all footwear in the world is produced in China, whose poor environmental regulation and sometimes dangerous environmental problems are well known.

With the current debate over cap-and-trade emission programs, this phenomenon can only get worse.

So how do we level the playing field and reward companies for good business practices?

When I think about this problem, I keep coming back to an idea I found in a casual conversation with a stranger while traveling. I can’t remember his face or his name, but the thought of him has stuck with me and festered in my mind for the better part of a year. His view was that putting the financial burden of environmental responsibility on corporations just doesn’t make sense for the reasons I’ve mentioned above. In a global marketplace, it makes companies less competitive than those that operate free of environmental and labor regulations.

Wouldn’t it make more sense to put an “environmental impact” or “ecological footprint” tax on the product itself?

Ugh, a tax?

Initially, I was also not enthusiastic about the idea. But think about it: Adding a tax proportional to a product’s ecological and social footprint removes the cost advantage of irresponsible production. All those environmental costs that are currently not included in our economic system would be taken into account and would increase the price of products manufactured in an unsustainable way.

This, in turn, would make moral dilemmas in the supermarket much easier. Is it more sustainable to buy organic products far away or local non-organic products? The tax-adjusted price should inform my decision. Can I afford chemical free shampoo? Yes, because the price of your chemical-laden competitors would increase through the environmental impact tax and remove the cost advantage of choosing that product.

The money raised from the tax could fund its implementation and other sustainable programs like public transportation (high-speed rail, anyone?) and alternative energy. Maybe it could even make a dent in our huge budget deficit.

Won’t this cost me money?

You might be thinking, “Sure, that’s a good idea in concept, but it’s going to add to my bills: groceries, clothes, everything.” Well yes, that’s true. But maybe if we look at the true cost of the products we casually consume, we can make a more informed decision about what is really necessary for our lives.

Furthermore, programs like this often have the greatest impact on the poor. But this could be offset by using some of the tax revenue for need-based assistance programs.

Anyway, running an economic system under the assumption of infinite resources is fundamentally flawed. Currently, environmental impacts such as air pollution, water pollution, and deforestation are not factored into the cost of a product: they are considered “externalities.”

These costs need to be factored into the system in a way that does not penalize those who engage in sustainable business practices. By taxing the environmental impact of a product, you level the playing field for the consumer.

Disclaimer

Of course, I am not an economist or a political guru. I don’t know how to implement such a tax or if it would be possible (although compared to creating a carbon trading market, it might not be that difficult). This is just the reflection of an intelligent and concerned citizen trying to find ways to make our economic system conform to the limits of our ecological limitations.

What do you think? Would such a tax have a beneficial effect on our production system? Join the conversation on our website!