In the public eye, taxes are consistently seen as a bad thing. They take away an individual’s money that they earn through work and put this money towards state and national initiatives that are good for the general public. However, many do not agree with tax protocol because it puts money toward ends that all people do not agree on. In another light, we can see a group of taxes being passed into law known as Pigovian taxes. Pigovian taxes are meant to correct the spillover costs of actions from corporations or individuals to society, known as “negative externalities” or “market failures.” For example, pollution is a negative externally. In theory, the action can be practically any behavior an individual does that is not ideal in society and the negative externality requires money to remediate.
Political conservatives are in favor of Pigovian taxes because we are already paying for Pigovian taxes. We are paying for Pigovian taxes by having overcrowded roads during rush hour traffic, higher insurance premiums because of the chances of accidents increasing due to the greater amount of people driving on the road and by increasing the amount of smog and pollution in the overpopulated cities in the U.S. We would like to decrease the cost that people are spending on general expenses such as gas, insurance policies, time and the environmental expenses we cause for future generations. Today, we see the repercussions of smog and pollution in big cities throughout the world like Delhi, India and Beijing, China. The individuals that live in these polluted cities get sick more often and have a greater chance of disease. By adding a Pigovian tax ,it makes both this safety and environmental burden into a benefit for the people. By taxing these negative externalities, it allows the government to make money while discouraging other activities that can hurt our economy as a whole.
However, there are several drawbacks of implementing Pigovian taxes, such as not knowing the actual cost of the negative externality. Then again, it is hard for us to stop implementing a Pigovian tax once we start because of the many behaviors of people that affect others around us and then affect the economy. We will never know the precise amount of money that a negative externality may have because we cannot measure all the factors involved. We cannot measure the amount of carbon emissions cars give off when stuck in traffic, the number of cars stuck in traffic and the fuel efficiency of the type of car stuck in traffic. Of course there are many other factors to consider as well that I have not mentioned. However, it does not change the fact that policy makers cannot measure these factors — all they can do is make rough estimates of the negative externalities of these vehicles.
Once a country develops a Pigovian tax for vehicles on the road it will be hard to just stop there. Pigovian taxes could be used to discourage other everyday habits people may have that can affect others negatively, such as smoking or neglecting the front yard. Both of these scenarios affect other people greatly, smoking can make individuals have shorter life spans and neglecting your front yard could decrease your neighbors’ property value. In theory, by putting a Pigovian tax in law it prohibits these habits and can ultimately take away the people’s free will by putting a limit on their everyday behaviors.
A Pigovian tax could potentially take away an individual’s free will, but, if a Pigovian tax is passed through the governmental system into law with specifications, it could demonstrate favorable effects for the general public. Pigovian taxes are used in countries around the world, such as Norway, the Netherlands, Sweden, Denmark, Portugal, the United States and so many others to help prohibit emissions. However, these taxes are not referred to as Pigovian Taxes, they are labeled as Green taxes. All in all, Pigovian taxes could be used to not only help save our environment but make life more efficient for others, as long as the government does not exploit the general public.
