Question

Which of the following is not a benefit of pollution taxes?

		Revenue can be used to lower taxes on other things
		It provides incentives for firms to innovate to reduce pollution
		It ensures a specific quantity of pollution is obtained
		It is a least-cost solution to pollution control

Answer 1

Ensuring a specific quantity of pollution is obtained is not a benefit of pollution tax.The method of imposing pollution tax cannot regulate that specific quantity of pollution is emitted.

• Revenue can be used to lower taxes on other things is one of the main benefit of pollution taxes.The tax income which is gained from pollution taxes decreases the cost of remaining goods and services.Even government attains maximum revenue income from pollution taxes and then tries to minimize the difficulty of common people by reducing the cost of goods.Therefore it is a benefit of pollution tax.
• Pollution tax provides incentives for firms to innovate to reduce pollution.There are many programmes which help firms,companies and manufacturing units to use the incentives gained from pollution taxes so that new techniques are innovated and implemented in process of production which emits less pollution.The incentive amount is spent on creating and using modern methods to decrease chemical emission during manufacturing goods.Therefore,this is another benefit of pollution tax where incentives are provided to firms to innovate to reduce pollution.
• Pollution taxes doesnt ensure that a specific quantity of pollution is obtained.It is not easy to calculate that a particular rate of pollution is emitted into environment.At times,even firms and companies can manipulate or mislead their accounts which depicts the range of pollution emission.So,it is difficult to ensure that a specific quantity of pollution is obatained.Hence,ensuring that a accurate rate of pollution is emitted is not a benefit of pollution taxes.Since it is not an easy task for pollution tax to ascertain the rate or amount of pollution is emitted,so it is not as benefit.
• It is a least cost solution to pollution control is another benefit for pollution tax.Usually,companies and common people choose to protect nature instead of paying higher taxes to government.When pollution taxes are imposed,companies increase the cost of the goods produced and consumers or common people will not buy such costly goods and ultimately production of goods decreases causing less pollution.So,imposing pollution taxes is the least cost solution to control pollution.

Hence,the non-benefit or disadvantage of pollution tax is it cannot ensure the specific or accurate quantity of pollution is emitted or obtained.