Taxing Hazardous Waste: The U.S. Experience

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Many states in the US impose taxes on hazardous waste. This paper conducts an empirical evaluation of the determinants of these taxes and reviews earlier research on their effects on hazardous waste. Earlier studies have shown that the taxes affect waste management, but my results and other evidence suggest that the tax-induced changes may not have improved welfare. Terms of use: Documents inTaxes on industrial hazardous waste are one of the most extensive uses of pollution taxes in the United States. The federal government and many states governments have implemented such taxes. The diversity of hazardous waste taxes makes them an interesting example of pollution taxes because we can compare the responses of polluters to different tax regimes.In this paper, I discuss the existing state and federal hazardous waste taxes and issues in their design and implementation. The paper then presents an empirical analysis of the tax rates adopted by states. In particular, the question is: do these taxes reflect the environmental costs of waste as opposed to other government objectives? Although an earlier study (Levinson, 2003) examines determinants of tax rates, the analysis here expands the hypothesized sources of variation and emphasizes the role of external costs. The results provide some evidence that taxes vary with environmental costs -making it possible that they improve welfare -but also point to non-environmental determinants and much unexplained variation.I then review the literature on the empirical effects of these taxes 2 on pollution and economic behavior. Studies have found only small effects of the state taxes, but these effects indicate that waste generators and managers do respond to the incentives created by taxes. The following section evaluates the advantages and disadvantages of existing taxes on hazardous waste and proposes some alternatives. A final section briefly concludes with an assessment of the U.S. experience with these taxes.

Management of Hazardous Waste and Contaminated Land

“…Thus, these taxes might represent a Pigouvian approach; they raise the private costs of waste management to reflect external costs and thus provide incentives to reduce generation, increase recycling, and shift to less harmful forms of waste management. However, neither Sigman (2003) nor Maguire and Jenkins (2009) find evidence that the variation across states reflects variation in the external costs of waste management. Studying hazardous waste taxes levied by the state of New York, Deyle & Bretschneider (1995) find that higher taxes on land disposal relative to other forms of management reduce the amount of waste sent to landfills and increase other forms of management.…”

Environmental Tax Reform: Principles from Theory and Practice to Date

“…For other discussions that cover some of the same issues, see, for example,Bovenberg and Goulder (2002);Fullerton and others (2008);and Metcalf (2009).4 For other assessments of environmental tax reforms, see, for example,Sterner (2002); andSchlegelmilch (1999).5 For some discussion of environmental taxes in other contexts, see, for example,Fullerton (2005) on household waste;Boyd (2003) on water pollution taxes;Sigman (2003) on hazardous waste charges; andDaniel and others (2010) on the taxation of resource rent.©International Monetary Fund. Not for Redistribution…”