Forget taxes on income – people need to be taxed on their carbon footprint

Technological advances and historically unprecedented income inequalities have raised living standards while enabling a new global elite to enjoy lifestyles more lavish in energy consumption and environmental impact than those enjoyed by any aristocracy in the past.

Real-life illustrations of elites show the excesses afoot. In one instance, a businessman oversees his economic activities across several Central Asian, West Asian and North African countries from a base in Dubai. He largely evades tax through an intricate tax-haven/residence arrangement concocted by his wealth advisor, giving him leeway to engage in the pleasures of modernity: frequent jet travel, the consumption of imported goods, and the ability to use as his playground a country whose extreme climate requires energy-intensive technology for much of the year.

In another instance, a civil servant for the United Nations lives in the diplomatic district of the capital of a developing nation. Despite her strong commitment to improving the world, her work- and play-spaces remove her from the society she’s supposedly serving, while revolving around a carbon-heavy diet of jet travel and imported goods and experiences.

Both these lifestyles, hatched in the 20th century and continued in the 21st, show disregard for ecological costs associated with global networks, alongside a culture of wasteful consumption. Yet, such behaviours have only increased: a third example represents the 21st century’s remote workers, freelancers and consultants. Employed as web-designers, interpreters or editors, they boost mobility by leveraging online jobs, cheap airline tickets, powerful passports and unregulated sharing technologies such as Airbnb and Uber.

This fluidity of movement allows this class, to which I belong as both a freelance journalist and a former UN official, to transcend the 20th-century model of a white-collar job tied to the country of residence and taxed income and relocate away from expensive London, Geneva or Hong Kong to affordable peripheral foreign capitals such as Lisbon or Hanoi. But the money saved comes at the expense of massive energy outlays associated with disposable, socially detached living and the kind of frequent international travel required to tap into the cost benefits achieved by inhabiting cheaper nearby countries. Members of this class show scant consideration for the huge environmental footprint their transnational lifestyles incur, and their calculations are driven by financial rationale and market-driven competition.

A global tax

So, if our current tax systems don’t penalise damage to the planet and can be side-stepped by the nomadic, hybrid lifestyles unlocked by technology, one solution could be to shift from disconnected national taxation systems to a collaborative global regime, whereby individuals are charged on the basis of their personal energy footprint. Those eating and living locally, rarely travelling on airplanes, and using recycled or multi-purpose materials would be taxed less than high-living internationals fuelling their lifestyle with imported products and jet travel. Equally, those whose job requires frequent travel and a high-energy footprint would pass the tax bill on to their employers, compelling companies to factor ecological impact into their bottom line.

Imagine being able to access a real-time summary of all your energy choices over your smartphone, not unlike a calorie-counting or ebanking app but vastly more omniscient. It would allow individuals and companies alike to follow, in a simplified way, how and why they are taxed on a range of retail consumer and travel transactions.

The system, administered by an international body, would know – and charge tax payers accordingly – for choosing, say, a bottle of mineral water shipped over from France over a locally bottled one. It would also track consumption, and reward retrospectively: refunds would flow when packaging gets recycled instead of ending up in landfill.

Once established, this would be a tax system of synchronised complexity, simultaneously tracking a multitude of transactions across the planet in supermarkets, airports, real-estate agencies and gas stations. Construction companies would get taxed on the quantity of materials and their transported distance, and penalised for the surplus discarded. Those anxious to acquire the latest cellphone would find their passion reflected in their tax bill. All legally sold products – from electronics to cans of beer to houses – would be fitted with sensors tracking the energy generated in their creation, transport, consumption and disposal. The value assigned at the end of the process would be split between the producing company and the consumer.

Empowered by artificial intelligence, this new form of taxation would track off-base comportment, too. For example, when estimating the charges incurred by a holidaying tax payer, the system would take into account the distance travelled, mode of transport (trains generally being more energy-efficient than airplanes) and the total amount of energy consumed. Choosing to leave the hotel air-conditioning on throughout one’s stay, or to take a hot-air balloon sightseeing trip rather than a hike, or to consume foreign-grown rather than local foods would all contribute towards a higher tax bill. Thoughtfulness would always be rewarded.

Counting carbon footprints

The futuristic-sounding technology supporting this system has existed for some time, whether in the form of RFID (radio-frequency identification) chips, nanobots or interconnected sensors hooked up to the Internet of Things and verified by blockchain, a form of triple-entry accounting also known as a distributed ledger. The only innovation would be in bringing them together in an integrated, global structure.

Undoubtedly, there is something massively intrusive about a digital panopticon capable of tracking our every move and choice in a personalised, real-time manner. Concerns could be managed through a more limited version based on a comprehensive consumption tax that would slowly fold out into the fuller system.

But companies and intelligence agencies have already deployed this technology for years – with our explicit or implicit consent – when tracking consumers and criminals. Rather than hiding behind platitudes, would it not make sense to embrace technology’s power, and reach for the mass good by consciously encouraging ourselves to live more responsibly, while initiating a public debate on how our data is shared and among whom?

An energy footprint-based tax system would accelerate our transition to a regenerative economy and help us fight climate change. The system holds societal advantages, too. Taxing us on the basis of our energy consumption counters the creation of migration choke-points, and encourages local innovation by downplaying imports, while reducing the kind of inequality between more and less economically developed countries that was baked into our global system of trade and consumption. It would compel the 1 per cent to pay its rightful tax share by eliminating avenues of evasion such as moving to tax havens or renouncing citizenship. Finally, the tax would encourage us to demand that transnational corporations behave ethically, by annulling the partial economies that they pass on to us, and which encourage our silent consent.

Only a radically new tax system, one that affects everyone’s bottom line, can compel the environmental transition in consciousness that we so clearly need.

This article first appeared on Aeon.