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Effluent charges
These are based on the content and quantity of a firm's discharges
into the air, water, or sewerage system. They have been used
mainly in the area of water pollution control and seldom for
air pollution control or waste management. The OECD found
that they had little incentive impact as they were generally
too low. They are kept low because of political pressures
from industries not wanting to pay higher charges, and concerns
that higher charges might encourage illegal dumping and evasion
of the charges.
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User charges
User charges are fees charged for using a resource or for
being provided with a service. They are commonly used for
the collection and treatment of municipal solid waste and
wastewater discharged into sewers. Royalties on resource use&emdash;such
as timber, minerals and oil&emdash;is another form of user
charge. Such charges can encourage people to be more efficient
in using resources, because the less they use the less they
will have to pay. Also, the money gained through the charges
can be used for environmental improvements.
In practice, because they are usually seen as a normal charge
for a service, user charges "rarely act as economic incentives"
(OECD 1989, p. 114). However, the Hunter Water Board in NSW
claims that user charges for water introduced in 1982 resulted
in less water use, and therefore the need for a new dam was
put off for several years (Department of Arts, Heritage and
Environment 1985, p. 12). Some user charges, such as local
council rates, are merely aimed at raising revenue.
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Product Charges
These are charges added to the price of products: they are
used to discourage disposal or encourage recycling. For example,
a charge could be made according to how much packaging a product
uses. A product disposal charge could be made on paper to
encourage waste-paper recycling. In Scandinavia, charges are
imposed on new cars to cover the cost of their eventual disposal;
in Germany, charges are imposed on lubricating and other mineral
oils to cover the costs of their collection and disposal.
As with effluent charges, product charges tend not to act
as incentives, because they are usually too low to affect
purchasing behaviour (OECD 1989, p.115). For the same reason,
they do not comply with the polluter-pays principle: the prices
of the products do not cover the costs of environmental damage
or disposal.
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Administrative charges
Administrative charges include control and authorisation
fees. They comprise payments to a government authority for
providing an administrative service, such as the registration
of chemicals or the administration of licences. These charges
could add to the environmental effectiveness of the authorities
by giving them additional funds, but are more usually added
to general government revenue.
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Sales and excise taxes
A sales tax is a percentage of the price of a purchase which
is paid to the government. An excise tax is a fixed amount
of money per product sold, and does not depend on the price
for which the product is sold. Both types of tax are generally
paid by consumers. They have the ability to affect buying
patterns, provided the consumers have a choice whether or
not to buy the product.
These taxes can provide incentives for consumers to buy environmentally
friendly products. This can be done by imposing different
amounts of sales tax on different goods or services so that
environmentally friendly products have a price advantage over
polluting products. For example, the government encourages
people to buy solar heaters, rather than heating their water
with mains electricity, by providing an exemption from sales
tax for solar heaters. The government also exempts refillable
bottles from sales tax, thereby giving them an advantage over
non-refillable bottles which add to the litter problem.
Tariffs
Tariffs are sales taxes on imported products which are designed
to help manufacturers in Australia remain competitive with
overseas manufacturers. The protection of polluting industries
through tariffs can adversely affect the environment. Tariffs
can also have an impact on third-world countries.
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