Are taxes on petrol correctly used? Repatriation of what “cash”? End users/payers of infrastructure should be present

Sir, Gillian Tett, discussing the financing of president Trump’s plan for infrastructure writes: “One sensible, overdue step would be to raise the petrol tax to pay for infrastructure; another would be to use proceeds from repatriated overseas corporate cash.” “Private money might yet save Trump’s infrastructure plans” May 26.

First, more taxes on petrol just means that more money goes into the same fiscal pocket to be channeled in often quite non-transparent ways to uses that might or might not include the building of infrastructure. The best use of taxes, such as those on petrol, which by the way constitutes de facto a discriminatory import tax on gas, is to transparently help fund a Universal Basic Income scheme.

Second, “cash”, what cash? Could Ms. Tett believe that high denomination bills stored under corporate treasurers’ mattresses represent that cash? Before opining anything about what “cash” could do, I suggest she finds out how that “cash” is currently deployed. Who knows, it might all be invested in gilts.

Finally, I have witnessed decent privatizations and infrastructure PPPs in my life, but I have also seen those that are only ugly expressions of crony statism. In this respect at the negotiation and executions phases of any privatization, any public infrastructure project, or any PPP, future users, or otherwise payers for the projects or the services, should be present… and their names publicly recorded as having represented the citizens.

Too often most of us see something very wrong that makes us reflect: “This would not have been the case had my grandfather or grandmother overlooked what was going on.”

@PerKurowski

To make saving our pied-a-terre affordable, we need to keep the climate-change-fight profiteers at bay

Sir, I refer to Martin Wolf’s “Inconvenient truths and the risks of denial”, November 2.

I do not read scientific projections on global warming, it suffices me to see what harm is done to our delicate pied-a-terre to know its wrong and that it should stop. But I also know that could be a much costlier than needed process, if we are not able to keep the climate-change-fight profiteers at bay. And I also know that we would be much more effective in our efforts if we could engage other social causes in the quest, like that of decreasing inequality.

That is why I am all in favor of for instance very high carbon taxes, with all its revenues paid out to citizens by means of a Universal Basic Income. That would decrease carbon emissions, allow supplier of cleaner energy sources to compete more and, to top it up, help our economies by reviving demand.

Sir, all those incredible over 500 percent gas/petrol ad valorem taxes in Europe, would do much better placed in the pockets of European citizens, than managed by European bureaucrats, capturable by their own and other special interests.

@PerKurowski ©

When raising carbon taxes, let’s try to keep the war against climate-change and the redistribution profiteers at bay

While the crude oil price index fell from 100% in 1980 to 18% in 1998, the products price index on the consumer level increased in the UK in constant terms from 100% to 247%; a result of that taxes on petrol went from 85% added value in 1980 to a confiscatory 456% in 1998. And the tax increase, similarly applied in other European countries was predicated on environmental reasons… even though for instance Germany and Spain, were simultaneously subsidizing coal. And when consumer protested the increase of petrol prices the blame was laid on the sheiks.

And now Tim Harford argues for the need to “raise the price of carbon-dioxide emissions, using internationally coordinated taxes or their equivalent [because] such a tax would make renewable energy sources more attractive – as well as encouraging energy-efficient technologies and behaviour”, “Alternative energy’s power struggle” July 30. 

Sir, even though I come from an oil extracting nation, Venezuela, that is something with which I could agree, but only under two conditions.

First that all the taxes and subsidies in the energy sector need to be absolutely transparent so that there is no hanky-panky going on.

And second, so that this do not just enrich many of the war against climate-change profiteers, all those tax revenues should be distributed equally to all citizens by means of a variable universal basic income. The beauty of it all is that doing so, would equally help, somewhat, to keep the many redistribution profiteers at bay.

PS

Per Kurowski

Universal Basic Income is a Societal Dividend, paid mostly by reducing the margins of the redistribution profiteers

Sir, John Thornhill and Ralph Atkins discuss the Universal Basic Income proposals flying around. “Money for nothing”, May 27

If anyone should stand up for ideas like the Universal Basic Income, that would be the poor of Venezuela. Out of an incredible oil boom, the 21st Century Socialism gave them less than 15 percent of what should have been their fair equal per capita share of those revenues. The rest was mostly swindled away by redistribution profiteers, wasted away by incapable government besserwissers or captured by “better-positioned” citizens.

For a Venezuelan to read about “Labor leaders… wary of introducing UBI, fearing it might only be used by rightwing politicians to shred the existing welfare state. By setting the rate too low and withdrawing other welfare benefits, it could end up hurting the very people it was designed to help most”, is sadly laughable.

And “the superficially preposterous idea of handing out an unconditional basic income of a year to every citizen, regardless of work, wealth or their social contribution”, a participation in the society, is not much more preposterous than a citizen inheriting some shares of a corporation that gives him the right to a dividend.

Also if we could only separate the redistribution from other government activities it would be so much easier to know what is happening, and therefore be better able to resist the calls of populist demagogues.

But the Universal Basic Income, to really fulfill its purpose needs to be the result of a citizens-to-citizens societal agreement, a Societal Dividend, or a Citizen's Dividend of that sort proposed by Thomas Paine; and not just a handout by governments and politicians that citizens need to be grateful for. On the contrary one of its major benefits it that it reduces the forced citizen submissiveness to those who dole out "the favors". Again, just look at the Venezuelans, suffering all type of humiliations, even being taunted and insulted, and not much happens.

And Universal Basic Income plans, if funded by carbon and petrol taxes would help to align the incentives for the fight against climate change with that of the fight against inequality.

And Universal Basic Income could be the first step in order to create decent and worthy conditions for that structural unemployment that seems to be growing. 

And let us be frank, if the Universal Basic Income is not offered voluntarily, and inequality grows, there will be many less voluntary and much harder options flying around for redistribution.

Universal Basic Income, is not “Money for nothing”, it might very well be money for better chances of the societal peace, which is required to achieve more and better development.

Universal Basic Income is not about assigning governments more power. On the contrary it is about wrestling redistribution powers from their hands.

@PerKurowski ©

Mexico needs carbon and petrol tax, which revenues are all redistributed by a Universal Basic Income mechanism.

Mexico needs to align incentives on pollution

Sir, Jude Webber writes about the horrible pollution caused by the excessive number of cars in Mexico City (“Corruption and car fumes clog up the capital”, Notebook, May 26) and proposes that eliminating corruption in emission testing could be an important part of solving this. Fat chance! As a Venezuelan, I know that this is not a viable route.

Ms Webber writes: “Mexicans are snapping up cars as fast as the world’s seventh largest producer can churn them out . . . Domestic consumption is the engine of economic growth so there is no official incentive to dissuade people from buying Mexican-built cars and associated products such as petrol.”

That’s really not the case. You must build up the right political and economic incentives to correct for it. If Mexico imposed carbon tax, petrol tax and a strong traffic toll system, and made sure all the revenues from it were immediately returned to the economy by means of a universal basic income, you would face a different reality. Then you would have aligned the incentives for pollution control and the fight against climate change with the fight against inequality, and that makes for a very powerful alliance.

Standing in the way, besides initial protests from car owners, would be the redistribution profiteers who would miss a chance to make political and economic capital. Just as in Venezuela.

Published in FT

Having carbon taxes fund Universal Basic Income schemes would align the fights against inequality and climate change

At least in the 1980s (I do not know of the before and after) high European taxes on gas (petrol) were defended by the need to protect the environment, while at the same time, at least in Germany and Spain, the much dirtier coal was being subsidized. And the resulting tax revenues are of course huge.

Stephen Foley writes about how investors should adapt their exposures to fossil fuels given all declarations of war against climate change. ”Even oil barons are giving up on fossil fuels”, April 4.

But the taxman needs also to adapt. If we consume less gas/petrol tax revenues will go down, so it is not farfetched to think that those hungry for tax revenues to manage, will again exploit the environmental argument to increase taxes… though they must know that puts their tax revenues on a sort of unsustainable path.

I believe though that climate change is best fought on its own merit, which means keeping the climate change profiteers, whether private or governments, at far distance.

In my own country Venezuela, as a tool to get rid of monstrously large gas subsidies, I have been proposing that all the net income the government derives from the domestic sale of gas, should be paid out in equal parts to all citizens, so as to keep the redistribution profiteers at bay.

And if the whole world did the same, using carbon taxes as a fundamental source of income to pay for a Universal Basic Income, that would not only help to increase fiscal transparency, but also beautifully align the fight against inequality with the fight against climate change.

Yes to a tax on carbon. But no to hidden subsidies or it going to tax revenues profiteers/distorters

I come from an oil extracting country, Venezuela, and so of course I should be horrified of a carbon tax that, one way or another, would affect the value we get from liquidating a barrel of non renewable oil forever.

But I am not, because in order to act responsibly towards the planet that our children will inherit, I accept the need to impose some restrictions on its use.

And I therefore entirely agree with Tim Harford in that “We can’t rely on high oil and coal prices to discourage consumption: the world needs — as it has needed for decades — a credible, internationally co-ordinated tax on carbon.” “Cheap oil and its consequences”, December 20.

But how the revenues produced from that tax should be handled, is an issue of utmost importance.

Let me start with the hardest concept to understand for all who do not posses oil on their own. The reason why you can charge a very high tax at the pump is the very high convenience value consumers give to petrol/gas. And so it is not really correct for a country that did not give up that non-renewable resource, to, by means of taxes, capture all that rent for its own benefit.

In some ways it would be like if oil extracting countries imposed a tax on the consumption on all foreign products that have especial attractiveness to their local consumers… a kind of luxury tax directed solely to the luxuries provided by others. What would for instance France say about a tax that in an oil extracting country they taxed French wines valued over a certain price range?

And we are not talking about peanuts. As I wrote in a letter published in FT in 2003 at that time, before the big increase in oil prices, for every $1 received by the one supplying the petrol, the European taxman got $4. And sometimes at that time, like in Germany and Spain, much of those tax revenues were even used to subsidize coal, like rubbing salt into the wound, and this even while the petrol tax was justified in environmental terms.

So how do I suggest the carbon tax revenues are applied? I have no defined idea about it, except wanting to avoid that some carbons get a better treatment than others, and that all those revenues fall into the hands of vulgar tax revenues profiteers or distorters.

What if all carbon taxes collected in the world were put in a big pot and thereafter just distributed in equal shares to all citizens of the world? That could both dent existing world inequalities (a stimulus for the economy), and increase the general interest in the fight for a better environment.

@PerKurowski ©

The real oil revenue fixer is not Opec, much less American shale oil, but the European taxman.

Sir, I can’t believe you use extremely valuable influential space such as your “Comment” space to allow Alan Greenspan to opine such nonsense as the higher cost American shale oil extractor’s having taken over from Opec the power over the price of oil.

What’s wrong with him? Does he not know that the price per barrel of oil is between $50 and $60? Does he not remember that as late as March 1999, The Economist, in “The next shock?” wrote” “$10 might actually be too optimistic. We may be heading for $5”. Had oil not gone over $50, there would be no American shale oil extraction to talk about. 

But, if there is anyone who effectively has taken over the power of generating revenues from oil, which is even more important than influencing the price of oil, well that is the European taxman who by means of gas (petrol) taxes, gets way more revenue than what is paid for a barrel of non-renewable oil of any provenance.

PS. In fact Opec and American shale oil extractors have a common interest fighting the European taxman.

Should not US shale oil producers sit down with Opec to have a little conversation about mutual interest?

Sir, I refer to Roula Khalaf’s “A kingdom fit for an oil price ordeal” December 30. It refers to a battle, supposedly for market shares, between traditional oil and shale oil, in which Saudi Arabia in its own name, and fait accompli in the name of Opec, do no want to lose out one more barrel. We will see what happens.

That said to me it has been clear that even more than some weak Opec members might wish for a reduction in oil supplies that strengthens oil process, in order to help their fiscal accounts, so must most of the shale oil producers with their much higher extraction costs.

The fact is though that shale-oil extractors can probably not sit down and chat over production limits with Opec, because that would perhaps be regarded as a cartel… and we can’t have that with private companies, can we?

But at least Opec and shale oil extractors, as well as other oil sourcing countries, could have an interest to sit down and talk about what to do with all those taxmen who, for instance in Europe, by means of gas consumption taxes, are perceiving much higher revenues per barrel of oil than they are… and are of course helping to put a damper on the demand of oil...creating a demand deficiency. I mean, is not a tax collectors cartel just like any other cartel?

Perhaps the US shale oil producers should join Opec

Sir, in “A new chapter for Opec?” November 26, Anjli Raval and Neil Hume, describe Opec and the US shale oil-producers as competitors… and this though in many ways they share the same problem and perhaps would be better of as allies.

What problem? That the taxman, at least the Europeans taxman, needs, wants, and by means of taxes on gas (petrol consumption) gets more income per barrel of oil, than those who sacrifice that non-renewable resource forever.

What would the demand for oil be in Europe and other places if gas (petrol) was not such a handy product to collect taxes on? I don’t know how much higher it would be but, if I were one of those Opec ministers, I would certainly invite those shale oil producers for a little talk on shared strategies.

G8, by championing the Extractive Industries Transparency Directive, might be selling snake-oil-illusions

Sir, I refer to Vanessa Houlder’s note “Extractive Industries” June 11, where she writes about Cameron urging his G8 partners to champion the Extractive Industries Transparency Directive, June 11.

I certainly appreciate the efforts of the initiative but, as an oil-cursed citizen of a country like Venezuela, where over 97 percent of all the nations exports go directly into government coffers, I cannot but feel that selling the idea that that kind of transparency could solve our oil curse problems, is like selling snake-oil-illusions, something which can only help the ruler and his petrocrats.

Let me ask you, if the UK was in a similar position, would you settle for more transparency, or would you directly go for wrestling that excessive natural resource power out of your ruler’s hand?

By the way, in 2003 you published a letter in which I held that all European taxmen were, by means of gasoline/petrol taxes getting more revenues per barrel of oil than any country who gives up that non-renewable resource forever. And, since that is still true, even at current oil prices, I ask again why does not EITI’s call for transparency cover that?

Our bank regulators, if energy regulators, they would subsidize oil, and tax methanol and ethanol

Sir, there are two comments that I want to make in reference to Robert McFarlane’s and George Olah’s “Let the market determine the best energy sources”, March 4.

The first is that since OPEC is cast as a runaway producer cartel that distorts the market, it is again timely to remind the authors that in Europe, by means of taxes on petrol-gasoline consumption, the European taxman gets more income per barrel of oil than the OPEC members who sacrifice this non-renewable resource.

Secondly, because they argue their case so well, I would like to ask for their support on the issue of bank regulations. Currently bank regulators, by allowing banks to hold much less capital when lending to “The Infallible” than when lending to “The Risky” are, in terms of energy, subsidizing oil and taxing methanol and ethanol, and that is of course pure lunacy.

The US tax system needs better working progressivism.

Sir I could not agree more with Martin Wolf when in “How Obama should face his vast economic challenges” November 12, he mentions “taxation of energy”. That should be as they say in the US a “slam dunk” though let us remember that even an Al Gore, a Nobel Prize winner because of is environmental friendliness, does not dare to mention such tax in the land of the cars.

What I do not agree with though is when Wolf recommends a regressive “national value added tax rather than to rely so heavily on the income tax” as I believe that the US has to create some better working progressivism in their tax system since the very hard times fiscal ahead requires massive doses of legitimacy. Do not forget that the US dollars should actually say “In God… and in the American taxpayer we trust”

When it comes to oil FT does not write without fear and favour.

Sir once again, when it comes to oil, I feel that what is most valid about FT’s “Without fear and without favour” are the quotation signs. In your “Pumped up”, May 28, you refer to a study that finds that “UK duty was 20% higher in real terms in 2000” and you therefore happily conclude that “it is not the cause or rising fuel prices” Why did you not compare it to a year when petrol duties really started to increased, like for instance 1980?

You talk about that driving is getting costly, but you do not dare to specify the components of that cost, could that be because the taxman still gets more than the oil man?

Many of the consumers have had oil at $130 for decades!

Sir may I congratulate on placing the current price of oil in its true perspective saying "When oil was $10 a barrel, the idea that the stuff was running out seemed demented", "Solving the $130 oil conundrum, May 21.

It is exactly in that "dementia" during the last oil bust-boom (where you place yourself depends on whether you are an extractor or a consumer) that we find the origin of the current boom-bust, and so let us hope that a similar dementia is not present this time. This requires being sincere with the facts.

Among the little acknowledged oil facts is that for instance that the European consumer and many others have already for decades been living with oil in the $130, only that instead of the extractor getting that value it was the taxman. While oil prices were nudging down to the $10 you mention, taxmen were stealthily increasing their take...will they now reduce it?

The environment needs a freed Gore

Sir in “Drafting Gore” October 15, you are absolutely right about that politics still pull a lot of weight for the Gore camp probably especially so for his closest aids. Many of us cannot wait for Al Gore to make clean break with the politics that tie his hands and so that he will at least be able to utter the word petrol-tax. It is a bit strange to say the least to see a country like Norway, and that even though an oil country applies immense taxes on the domestic consumption of petrol, because of his efforts for a better environment, awards the Nobel prize to a man that does not even mumble about the need of taxing more the consumption of petrol in the USA.

Al Gore’s crusade against global warning is not yet warm enough!

Sir, Al Gore’s crusade for a better environment has now an official web site http://www.climatecrisis.net/. The site includes a long list of recommendations on how citizens could help, where we find all the standards like driving less and recycling more but also requests to shift up gears and go for planting a tree and refraining from eating meat, since cows are one of the greatest methane emitters.

Unfortunately in the list we cannot find a “write to your Congressmen and ask for a tax on gas (petrol)", which by cutting that demand that consumes one of every seven barrels of oil in the world just on American roads and highways, would be the best and most concrete evidence of really wanting to help out the environment… and also the American economy at large.

As a result we have to conclude that Gore’s crusade has not yet warmed up enough.

Al Gore

A sensible country would raise tax on petrol, so what is US waiting for?

Published in FT, April 2, 2005

Sir, it is hard to understand the United States of America!

It has a huge fiscal deficit; it has a huge current-account deficit; it is by far the world’s biggest oil consumers both in absolute and in relative terms; now willing to explore for oil and gas in Alaska, it shows itself to be aware of the difficult energy outlook the world faces; it seems aware and resolute about the environmental problems (ignore the Alaska part) as it imposes other expensive environmental regulations, such as recycling—which, as no one likes to do it, requires the hiring of Salvadoreans; it speaks all over the place about having to reduce the vulnerabilities of its oil supplies. 

As any other sensible country would, in similar circumstances, increase the taxes on petrol consumption and substantially help to solve all the above-mentioned problems; and as the US has always shown willingness to pull together as a nation, recently even to the extent of going to war on shaky grounds, the big question remains: why is it that the leaders of the US do not even want to talk about a substantial tax on petrol?

The search for transparency in an oil-consuming world

Published in Financial Times, December 24, 2003

Sir, There has been a lot of talk lately about a curse that, through corruption and other distortions, is stopping oil-rich countries from turning income into development. The Extractive Industries Transparency Initiative, championed by the UK and endorsed by the World Bank, has been named an exorcist and is starting the rites by applying a much-welcomed transparency to projects such as the Chad-Cameroon pipeline.

In the name of that same transparency, let us also remember that for every $1 received by any oil producing country (which forever sacrifices a non-renewable asset), the public treasury of many oil consuming countries receives, net, at least $4 and is therefore a likely victim of the same curse, albeit stricken by different symptoms. For instance, in many oil-consuming developed countries, the curse has now created such an addiction to petrol taxes that their whole fiscal structures would be completely unsustainable without them.

Transparency would also, perhaps, not be a bad rite to use to exorcise this tax man’s curse, since most of the petrol consumers in these countries are not remotely aware of the real extent of the taxes and much less of how the proceeds are used.

For instance, having been told that these taxes were environmental, they would be surprised to learn that probably less than 0.5 per cent of the $100 bn collected yearly in Europe, just in taxes on lead-free petrol, goes to the environment; and, worse, that much of it goes in subsidies to the even less environmentally friendly coal.

Also, today, as the possibilities of satisfying the world’s demands of energy seem quite uncertain and the world becomes more aware that the final cost of cutting, or not cutting, the trees of the Amazon will be paid by all, whether they like it or not, it is clear that the world needs to become much more penny-wise when developing alternative energies; and we all know that the best and only companion of the penny-wisest is transparency.

So, after the pipelines, when do we start with the Exchequer’s bag?

PS. I don't find any longer the letter on FT's web so I will scan a copy of it when I find it. It was reproduced by OGEL too