LAWMAKERS are looking at old-growth redwoods, nonrecycled paper, federally subsidized water, acid rain, and fuel guzzlers for potential ``enviro-taxes'' designed to encourage conservation and recycling while raising new revenues. Rep. Dan Rostenkowski (D) of Illinois, chairman of the House Ways and Means Committee, has already endorsed the concept, estimating such levies could bring in $3.2 billion in the first year.
The idea has quickly caught the attention of scores of lobbyists representing many of the industries that would have to pay the taxes. At a Ways and Means Committee hearing this month, the staff had to schedule three days of meetings to fit in the 80 groups that wanted to testify.
The rationale behind the legislation is that the tax code can be used to achieve environmental goals by the use of tax penalties. ``When you pollute, you pay the IRS,'' says Rep. Fortney (Pete) Stark (D) of California, a chief sponsor of several of the bills.
For example, Representative Stark and Rep. Tom Downey (D) of New York are co-sponsors of legislation that would impose an excise tax of $200 to $300 per ton on acid-rain emissions. ``We can make acid rain pay its societal price,'' said Stark at a hearing. Deputy Assistant Secretary of the Treasury Michael Graetz said, however, that the administration preferred regulation to modifications in the tax code. He specifically pointed his thumb down at an acid-rain tax.
Congressional aides, however, are not so sure the administration is really opposed. If the tax were called a ``user fee,'' it might be more acceptable, says a Stark spokesman. In fact, during Mr. Graetz's testimony there was considerable debate over what constituted a user fee versus a tax.
Environmentalists say that the tax issue is part of their agenda. ``Regulation sets the minimum standard to meet, but at the same time it is important to make sure there is some incentive to do even better. That is why you have an emission fee or tax,'' says Dan Lashof, a scientist at the Natural Resources Defense Council.
To actually work, environmentalists believe Congress would have to enact a relatively high tax.
``On the basis of these taxes would you see big environmental gains?'' asks Roger Dower of the World Resources Institute. He answers in the negative. Unless the tax were high enough, environmentalists believe it would only affect the marginal cost of pollution.
Who will ultimately pay the tax is another matter. For acid rain, power plants in the Midwest would have to bear the largest expense since they burn the highest sulfur coal.
At his hearing, Rostenkowski, a Democrat from Illinois, wondered whether or not Congress was willing to bail out the Midwest utilities the same way it bailed out the thrift institutions.
Bill Walsh, legislative director at Greenpeace Action, contends that Congress should revamp other parts of the tax code with an eye toward the environment. For example, the tax code allows companies a depletion allowance by permitting them to deduct a percentage of the sale of a mineral or petroleum product. ``The highest depletions are for the most pernicious materials - lead and mercury,'' Mr. Walsh says.
Industry, however, is adamantly opposed to any new taxes or user fees. At the hearing, more than 30 industry groups argued against changes in the tax code. ``Under no circumstances should Congress adopt new - or raise existing - sector specific taxes,'' said Paul Huard, vice president for the National Association of Manufacturers. Instead, business would like tax credits for meeting environmental goals.
This would not be the first time Congress has enacted a tax penalty to achieve an environmental goal
. This year there is a tax of $1.37 per pound on chlorofluorocarbons (CFCs), which are suspected of adversely affecting the ozone layer. The E.I. du Pont de Nemours & Co. and Allied-Signal Inc., the two largest producers of CFCs, have started to buy used CFCs for recycling. Recycled CFCs are not taxed.
To Stark this is a sign that the legislation is having its intended effect. ``The tax is clearly responsible,'' he stated.
The chemical companies, however, deny that the excise tax made them begin the recycling plan. F.A. (Tony) Vogelsberg, environmental manager at Du Pont, says his company's plans were made a year ago. ``We thought as a significant player in the market we should offer some viable mechanism to recycle,'' Mr. Vogelsberg says.