The Return of the Superfund Tax
The U.S. Environmental Protection Agency (EPA) has sent a letter to Congress in support of reinstating the old and lapsed Superfund polluter pays taxes. Superfund is the federal government's program that investigates and cleans up the nation's most complex, uncontrolled or abandoned hazardous waste sites. If reinstated, the Superfund tax would provide a stable, dedicated source of revenue for the program and increase the pace of Superfund cleanup. It would also ensure that parties who benefit from the manufacture or sale of substances that commonly cause environmental problems at hazardous waste sites, and not taxpayers, help bear the cost of cleanup when responsible parties cannot be identified.
Superfund is the name given to the environmental program established to address abandoned hazardous waste sites. It is also the name of the fund originally established by the Comprehensive Environmental Response, Compensation and Liability Act of 1980. This law was enacted in the wake of the discovery of toxic waste dumps such as Love Canal and Times Beach in the 1970s. It allows the EPA to clean up such sites and to compel responsible parties to perform cleanups or reimburse the government for EPA lead cleanups.
The Superfund cleanup process is complex. It involves the steps taken to assess sites, place them on the National Priorities List, and establish and implement appropriate cleanup plans. This is the long-term cleanup process.
The Superfund trust fund is used to clean up contaminated sites. Parties found liable for contaminating the sites generally bear the cost of Superfund cleanups. The Superfund trust fund covers the costs when liable parties no longer exist or either cannot or will not undertake a cleanup.
The Superfund program currently receives funding from two annual appropriations: general funds from the Treasury and balances in the Superfund trust fund. In earlier years, revenues for the trust fund came from three dedicated taxes (on petroleum, chemical feed stocks, and corporate income). Those taxes expired in December 1995 and the amount of money in the fund gradually declined to zero by the end of fiscal year 2003. The Superfund trust fund has been funded almost entirely through general revenues ever since.
President Obama has proposed to reinstate Superfund taxes without specifying any details. When they expired at the end of 1995, Superfund taxes included 1) an excise tax of 9.7 cents per barrel on crude oil or refined oil products; 2) excise taxes of $0.22 to $4.87 per ton on certain chemicals; and 3) an excise tax on imported substances that use one or more of the hazardous chemicals subject to excise tax in their production on manufacture. These three Superfund taxes would be reinstated on January 1, 2011 if Obama's plan is followed. The proposal would also reinstate the Superfund environmental income tax of 0.12 percent on the amount of a corporation's modified alternative minimum taxable income that exceeds $2 million.
Those in favor of reinstating the Superfund taxes argue that imposing these taxes is consistent with a polluters pay principle: industries and companies that use hazardous substances should bear the cleanup costs. However, as with all taxes, the costs are passed done to the consumer in the cost of the resulting products.
Further, the pollution in question is legacy contamination, so the tax does not make the original guilty party pay.
Proponents also argue that the Superfund taxes may discourage the use of toxins and, ultimately, hazardous waste. However, the taxes may distort economic behavior without giving businesses an incentive to handle hazardous wastes more carefully or avoid producing them.
EPA is taking the position that Superfund activities should not be paid out of general revenues but out of a targeted tax. EPA has written to congress supporting the new Superfund tax.
For further information: http://yosemite.epa.gov/opa/admpress.nsf/0/6E61EB7AB20B163C8525774900592657