Incentives

Large corporations are held accountable by their shareholders to provide an economic return on the shareholder's investment. This motivates the corporations to focus on revenue growth at the expense of just about everything else. Even breaking the law can be justified when the fine for being caught is less than the profit to be made. Expecting businesses to voluntarily incur any significant costs on behalf of the communities they are in or the environment they exploit is completely unrealistic. There are, however, two ways to motivate the business community to act responsibly towards the people and the Earth. One is true cost pricing and the other is appropriate taxation.

 

Under our current accounting and pricing system, many commonly used products carry hidden environmental and social costs such as air and water pollution, deforestation, and toxic waste. These costs are created during the production, use, or disposal of the products. While the producer internalizes revenue and profits from these products, the costs are externalized to society and the natural environment. This externalizing of costs may make the consumer price low, but we all pay for it eventually through adverse health effects and reduced quality of life. In this way, externalized costs equate to a subsidy. Artificially low prices on subsidized products encourage their over-consumption and, therefore, the under-consumption of environmentally sound products.

 

When taxes are levied against labor, using labor in production is more expensive and is therefore a disincentive for employment. This also diminishes the economic value of labor by decreasing the worker's purchasing power, thus discouraging work.

 

Our property tax system is full of inequities and disincentives. In 1978, Proposition 13 took the burden off property owners including corporations. It has resulted in an unequal and unfair burden on equivalent properties and on residential as compared to commercial properties, as well as an increased dependence by governments on the more regressive sales tax.

 

 

True Cost Pricing (TCP) is an accounting and pricing system that relates to the Green values of ecological wisdom, sustainability, future focus, and social justice.

 

The inclusion of all costs into the price of a product would make more-ecologically-sound products cheaper to the consumer in terms of market price and the demand for these products would increase. Also, various cultural / traditional industries that have been marginalized by unrestrained technology could flourish.

 

For example, with solar power, if all the costs were considered (oil spills, air quality regulation, health care, massive subsidies to the oil, gas, coal and nuclear industries), solar power would clearly be the cheapest alternative. Also, in the cattle industry, which is known to be severely detrimental to the environment, we subsidize the industry with free or cheap grazing land and water subsidies and we pay for the environmental aftereffects.

 

Many of the laws that exist to prevent environmental and social damage are not adequately enforced. Examples include smog checking of vehicles, and tobacco taxes and court settlements, which are not being used as intended.

 

The Green Party calls for the implementation of true cost pricing: 

 

The concept of true costing, as a part of cost / benefit analyses, should be a basis for decisions on government projects and in Environmental Impact Statements.

Integrate the concept of TCP into domestic industrial policies and regulations, and likewise, promote it in international trade agreements.

 

Enforce laws that exist to prevent environmental and social damage.

 

Provide education to explain that TCP incorporates the true life-cycle cost of a product. It will result in a net decrease in consumer prices as less damaging practices are adopted.

 

Implement product labeling to inform consumers of the total cost of the product's ingredients and manufacturing process.

 

Establish an information clearinghouse, consultant's network, and other communication channels for the exchange of information about ecologically benign techniques.

 

Recognize that TCP may have short term impact on people of lesser financial means and implement measures to mitigate these effects.

 

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