CSPA opposes taxes or fees on chemicals to discourage their use. Taxing products based upon the mere presence of a chemical in a product undermines the practice of performing scientific safety-based assessments. Safety assessments are needed to determine when chemicals cannot be used safely in a consumer product or a specific use application. In fact, when certain chemicals have presented unreasonable risks to human health or the environment when used in consumer products; CSPA members have worked to find safer alternatives that are effective and commercially viable.
However, an overly simplistic tax system, whereby chemicals would be subjected to monetary penalties, does not take into consideration the extensive evaluations that are necessary to determine if chemicals can be safely used any given product.
In addition, there are serious challenges to defining hazardous chemicals. A hazardous chemical could be defined based upon numerous factors such as toxicity, bioaccumulation, persistence in the environment, or a myriad of other characteristics. Before a tax like this could be considered, extensive analysis would be needed to determine what the appropriate criteria should be for a chemical to qualify as hazardous
However, even if a set of criteria could be identified to determine which factors are of concern, extensive analysis would still be needed to establish appropriate threshold levels for each chemical use application. Such evaluations would be a costly and require significant expertise. As seen from California’s Proposition 65, the Safe Drinking Water and Toxic Enforcement Act of 1986, the creation of such a system of chemical evaluation can be extremely resource intensive.
The State of California should not arbitrarily tax chemicals produced, used, or distributed in California. The Soap and Detergent Association (SDA) recommends the State undertake a categorization and prioritization exercise based on chemical hazards, uses and exposures to identify those chemicals that are of the highest concern in California, similar to the exercise conducted in Canada for chemicals on its domestic substances list (DSL). Those chemicals identified as having unacceptable environmental or human health risks should be managed to mitigate those risks. SDA recommends that, to the extent the State wishes to encourage the development of alternatives to the use of chemicals of concern, it should focus its resources on scientific discovery, commercialization and dissemination of the alternatives through its Green Chemistry program.
The use of taxation as a means of discouraging the use of chemicals with a less favorable environmental or human health profile may be effective in influencing the market. However there may be negative environmental, economic or social impacts to such a policy. For example, the failure of an alternative chemical with a more favorable environmental or human health profile to be adopted in the market would likely be the result of inferior performance or increased costs of reformulation and conversion within facilities and supply chains, and for the material itself. Manipulation of the market toward a chemical with a more favorable hazard profile but an inferior performance might lead to greater overall harm due to greater use, and therefore greater exposure. Likewise, elimination of safe but affordable products from the market through tax policies might deprive low-income families or cost sensitive companies of the benefits of such products, and more expensive alternative products. The impact of the Green Chemistry Initiative should include benefits for citizens of all income levels in California, but should avoid unnecessary burdens on consumers and businesses.
The proper way to reduce hazards associated with chemicals is to provide market incentive for the creation of and use of safer chemicals in specific areas. For large volume widely available public products the best way to insure progress is allow the market to drive innovation. Setting government standards or taxing only provides a minimum baseline and will prevent continuous improvement.
Taxing chemicals based upon hazard alone is simply not a good idea. This would serve to stifle innovation, create unnecessary inflation, grow government bureaucracy, move more jobs overseas, penalize US companies in the world market, and most importantly restrict the development of technology necessary to address many of the pressing issues of the 21st century such as global warming.
Chemical consideration is much more complex than just hazard and should include the benefits, the exposure potential, risk, and many other factors. Countless marvels of the modern world would not exist without hazard. For example, electricity has tremendous associated hazard but controlled and used wisely provides the basis for modern life. If electricity had not been developed due to its hazard or initially taxed because of that hazard, modern living as we know it now would not exist.
The same analogy can be applied to chemicals. For example, the "black box" in airplanes has contributed greatly to the overall safety of air travel. The virtually indestructible coating that enables the black box to survive crashes might never have been created if chemical hazards were taxed. One of the necessary chemicals to make that coating is extremely hazardous. However, it poses no risk to the general public and its use has saved countless lives. Taxing chemical hazards might prevent the next great discovery that changes the world.
I thought awhile and came up with the perfect arbitrary answer: Use the third number drawn on the California MEGA Millions lottery on the second Friday of each month. Changing numbers will keep things interesting. Start with a tax that is the number in dollars for each pound of each hazardous substance. You can ratchet up the fee by moving the decimal point according to how much the program’s budget is increasing and revenues falling (fewer hazardous substances will require higher fees). But there are some other questions:
- What is the definition of “hazardous”? Isn’t everything hazardous at some level of exposure (dose)? Even water will kill you if you try to breathe it or drink too much during a marathon. But never mind, UC Berkeley will figure that one out. - How many times is a hazardous chemical taxed – when it is produced in the state (can’t be many of those anymore) + when it is distributed in the state ( is that the first time it comes into the state or every time it moves from location to location?) + when it is used? - Who is going to pay the taxes? All the distributors? All the users? - Of course you can’t tax what you don’t know about, so this assumes everyone is registering their manufacture, distribution and use of a “hazardous “ chemical, right? - Is there a de minimus level? I suppose not, since hazard is the only criterion and a molecule has an intrinsic hazard separate from any exposure considerations. People will just need to use computers to figure out the lottery number x whatever factor of 10 x % composition x total weight of molecules made/distributed/used per year. Guess that means total composition labeling throughout the supply chain too. See #5. - How big a tax collection system are you talking about? You’ve got the model of the pesticide mil tax. But this goes well beyond that. Especially since dang near every chemical will be “hazardous.”
Seriously, I think the root issue is consumption – whether of “green” stuff or not so green stuff. Americans, including Californians, buy and use too much stuff. An explicit flat tax on every thing by weight might be the most effective to bring home the issue of how much stuff we use. How high to make that tax is another issue – is it a revenue generator? Should it hurt? Or is it a message? I prefer the latter.
This question appears to be based on the general assumption that a tax is appropriate, which is unwarranted. GMA opposes taxes or fees on products, product ingredients, and packaging. As California has recognized, Green Chemistry is about sustainable innovation. The goal is products that are safe for human health and the environment and that also meet consumers’ needs for performance and value.
The issue of taxation raises a host of complex questions, including: • Shouldn’t the focus of the Green Chemistry Initiative be on promoting innovation, and couldn’t a tax impose undue burdens or even stifle innovation? • How would such a tax account for the actual risk of chemicals in various applications? • If a tax were simply based on the “hazard” of a chemical, how would that create an incentive to reduce actual risk? In other words, how would such a tax create an incentive to reduce exposure? (For example, one could imagine a case where a product contains a chemical which has no substitute, but where it might be possible to innovate to reduce exposure to the chemical. A tax based simply on the presence of the chemical would not promote such innovation.) • Would a tax be based on specific chemicals, specific usage, products, etc.? • Does it make sense to tax essential chemicals? • Why should California add to the already high burden of doing business in California? • Wouldn’t a tax lead to higher prices for California consumers, reduced consumer choice, etc.? • Why does it make sense to impose a general tax as opposed to considering whether a limited number of chemicals have a hazard and exposure profile in particular uses that may pose risks that should be addressed and managed?
A tax mandate would not address key issues in chemicals management (e.g., the criteria that define a chemical to be hazardous, a risk analysis taking into account both hazard and exposure characteristics.)
BIOCOM believes there should be no additional tax on hazardous chemicals produced in California. Instead, as an incentive for research and development by industry, there should be tax incentives for producing chemicals shown to be substitutes for more hazardous chemicals.
There should be NO tax or fee of any kind on hazardous chemicals produced, used, or distributed in California. The question assumes there should be some tax in place. This is wrong- period. If this Green Chemistry initiative is to be a successful state project with industry input, it should begin on equal footing with all stakeholders and not begin with penalties aimed at the industry in the form of a new revenue gereartion source on the backs of those within the business of chemistry. Please rethink the premise of a tax in the first place. The legislators are stating that this initiative needs "teeth". Incentives, rather than taxes, are what is needed.
The concept of "mil tax" is familiar to the chemical industry.
The important question is for what will the moneies derived be used: penalization?, enforcement of standards? destruction of waste? technological exploration into waste re-use?
Taxes, whether used as incentives for safer chemicals or as penalties for hazardous chemicals, are one mechanism to reduce the use of hazardous chemicals and drive the development of safer alternatives. Whether this mechanism uses tax incentives for safer chemicals or tax penalties for hazardous chemicals, it is the tax differential for hazardous versus safe chemicals that could create the desired incentives and disincentives. If California chooses a tax mechanism to promote safer chemicals, the tax differential must be large enough to 1. drive changes in the market; 2. fully account for the external costs associated with using hazardous chemicals, and 3. offset the costs of a regulatory program focused on reducing the use of hazardous chemicals. We are not aware of a well-developed model for using a tax system as a general mechanism to protect public health and the environment from chemical hazards and drive the market to use safer chemicals. Instead, regulatory approaches have been demonstrated to be effective in driving change, Consequently, any tax program must be supported by an effective regulatory structure.
Determining the appropriate tax rate for California will require an understanding of the true costs of using hazardous chemicals. The recent Green Chemistry reports from the University of California document both the enormous amount of damage to human health and the environment that is being externalized onto society by industrial chemicals, as well as the enormous data gaps in our understanding of the details of which chemicals are capable of and are causing that harm, or the economic impacts on communities, government, and even businesses who are not considering the costs they bear related to worker absenteeism, health care, liability, environmental remediation, etc. Extensive understanding of this information would be required to develop an effective comprehensive tax system. Thus, these reports both justify imposition of extensive taxes to discourage use of hazardous chemicals and show how difficult structuring a comprehensive tax system would be to develop.
Accordingly, we believe 1) a focus on regulatory structures that force development of more information about chemicals and require industry to prove their chemicals are reasonably safe is more likely to be fruitful as a driver of change and 2) any tax system that is implemented to support the regulatory structure must be based on the true costs of hazardous chemical use, including economic externalities such as the costs to society and the environment.
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Reader Comments (9)
CSPA opposes taxes or fees on chemicals to discourage their use. Taxing products based upon the mere presence of a chemical in a product undermines the practice of performing scientific safety-based assessments. Safety assessments are needed to determine when chemicals cannot be used safely in a consumer product or a specific use application. In fact, when certain chemicals have presented unreasonable risks to human health or the environment when used in consumer products; CSPA members have worked to find safer alternatives that are effective and commercially viable.
However, an overly simplistic tax system, whereby chemicals would be subjected to monetary penalties, does not take into consideration the extensive evaluations that are necessary to determine if chemicals can be safely used any given product.
In addition, there are serious challenges to defining hazardous chemicals. A hazardous chemical could be defined based upon numerous factors such as toxicity, bioaccumulation, persistence in the environment, or a myriad of other characteristics. Before a tax like this could be considered, extensive analysis would be needed to determine what the appropriate criteria should be for a chemical to qualify as hazardous
However, even if a set of criteria could be identified to determine which factors are of concern, extensive analysis would still be needed to establish appropriate threshold levels for each chemical use application. Such evaluations would be a costly and require significant expertise. As seen from California’s Proposition 65, the Safe Drinking Water and Toxic Enforcement Act of 1986, the creation of such a system of chemical evaluation can be extremely resource intensive.
The State of California should not arbitrarily tax chemicals produced, used, or distributed in California. The Soap and Detergent Association (SDA) recommends the State undertake a categorization and prioritization exercise based on chemical hazards, uses and exposures to identify those chemicals that are of the highest concern in California, similar to the exercise conducted in Canada for chemicals on its domestic substances list (DSL). Those chemicals identified as having unacceptable environmental or human health risks should be managed to mitigate those risks. SDA recommends that, to the extent the State wishes to encourage the development of alternatives to the use of chemicals of concern, it should focus its resources on scientific discovery, commercialization and dissemination of the alternatives through its Green Chemistry program.
The use of taxation as a means of discouraging the use of chemicals with a less favorable environmental or human health profile may be effective in influencing the market. However there may be negative environmental, economic or social impacts to such a policy. For example, the failure of an alternative chemical with a more favorable environmental or human health profile to be adopted in the market would likely be the result of inferior performance or increased costs of reformulation and conversion within facilities and supply chains, and for the material itself. Manipulation of the market toward a chemical with a more favorable hazard profile but an inferior performance might lead to greater overall harm due to greater use, and therefore greater exposure. Likewise, elimination of safe but affordable products from the market through tax policies might deprive low-income families or cost sensitive companies of the benefits of such products, and more expensive alternative products. The impact of the Green Chemistry Initiative should include benefits for citizens of all income levels in California, but should avoid unnecessary burdens on consumers and businesses.
The proper way to reduce hazards associated with chemicals is to provide market incentive for the creation of and use of safer chemicals in specific areas. For large volume widely available public products the best way to insure progress is allow the market to drive innovation. Setting government standards or taxing only provides a minimum baseline and will prevent continuous improvement.
Taxing chemicals based upon hazard alone is simply not a good idea. This would serve to stifle innovation, create unnecessary inflation, grow government bureaucracy, move more jobs overseas, penalize US companies in the world market, and most importantly restrict the development of technology necessary to address many of the pressing issues of the 21st century such as global warming.
Chemical consideration is much more complex than just hazard and should include the benefits, the exposure potential, risk, and many other factors. Countless marvels of the modern world would not exist without hazard. For example, electricity has tremendous associated hazard but controlled and used wisely provides the basis for modern life. If electricity had not been developed due to its hazard or initially taxed because of that hazard, modern living as we know it now would not exist.
The same analogy can be applied to chemicals. For example, the "black box" in airplanes has contributed greatly to the overall safety of air travel. The virtually indestructible coating that enables the black box to survive crashes might never have been created if chemical hazards were taxed. One of the necessary chemicals to make that coating is extremely hazardous. However, it poses no risk to the general public and its use has saved countless lives. Taxing chemical hazards might prevent the next great discovery that changes the world.
I thought awhile and came up with the perfect arbitrary answer:
Use the third number drawn on the California MEGA Millions lottery on the second Friday of each month. Changing numbers will keep things interesting. Start with a tax that is the number in dollars for each pound of each hazardous substance. You can ratchet up the fee by moving the decimal point according to how much the program’s budget is increasing and revenues falling (fewer hazardous substances will require higher fees). But there are some other questions:
- What is the definition of “hazardous”? Isn’t everything hazardous at some level of exposure (dose)? Even water will kill you if you try to breathe it or drink too much during a marathon. But never mind, UC Berkeley will figure that one out.
- How many times is a hazardous chemical taxed – when it is produced in the state (can’t be many of those anymore) + when it is distributed in the state ( is that the first time it comes into the state or every time it moves from location to location?) + when it is used?
- Who is going to pay the taxes? All the distributors? All the users?
- Of course you can’t tax what you don’t know about, so this assumes everyone is registering their manufacture, distribution and use of a “hazardous “ chemical, right?
- Is there a de minimus level? I suppose not, since hazard is the only criterion and a molecule has an intrinsic hazard separate from any exposure considerations. People will just need to use computers to figure out the lottery number x whatever factor of 10 x % composition x total weight of molecules made/distributed/used per year. Guess that means total composition labeling throughout the supply chain too. See #5.
- How big a tax collection system are you talking about? You’ve got the model of the pesticide mil tax. But this goes well beyond that. Especially since dang near every chemical will be “hazardous.”
Seriously, I think the root issue is consumption – whether of “green” stuff or not so green stuff. Americans, including Californians, buy and use too much stuff. An explicit flat tax on every thing by weight might be the most effective to bring home the issue of how much stuff we use. How high to make that tax is another issue – is it a revenue generator? Should it hurt? Or is it a message? I prefer the latter.
This question appears to be based on the general assumption that a tax is appropriate, which is unwarranted. GMA opposes taxes or fees on products, product ingredients, and packaging. As California has recognized, Green Chemistry is about sustainable innovation. The goal is products that are safe for human health and the environment and that also meet consumers’ needs for performance and value.
The issue of taxation raises a host of complex questions, including:
• Shouldn’t the focus of the Green Chemistry Initiative be on promoting innovation, and couldn’t a tax impose undue burdens or even stifle innovation?
• How would such a tax account for the actual risk of chemicals in various applications?
• If a tax were simply based on the “hazard” of a chemical, how would that create an incentive to reduce actual risk? In other words, how would such a tax create an incentive to reduce exposure? (For example, one could imagine a case where a product contains a chemical which has no substitute, but where it might be possible to innovate to reduce exposure to the chemical. A tax based simply on the presence of the chemical would not promote such innovation.)
• Would a tax be based on specific chemicals, specific usage, products, etc.?
• Does it make sense to tax essential chemicals?
• Why should California add to the already high burden of doing business in California?
• Wouldn’t a tax lead to higher prices for California consumers, reduced consumer choice, etc.?
• Why does it make sense to impose a general tax as opposed to considering whether a limited number of chemicals have a hazard and exposure profile in particular uses that may pose risks that should be addressed and managed?
A tax mandate would not address key issues in chemicals management (e.g., the criteria that define a chemical to be hazardous, a risk analysis taking into account both hazard and exposure characteristics.)
BIOCOM believes there should be no additional tax on hazardous chemicals produced in California. Instead, as an incentive for research and development by industry, there should be tax incentives for producing chemicals shown to be substitutes for more hazardous chemicals.
There should be NO tax or fee of any kind on hazardous chemicals produced, used, or distributed in California. The question assumes there should be some tax in place. This is wrong- period. If this Green Chemistry initiative is to be a successful state project with industry input, it should begin on equal footing with all stakeholders and not begin with penalties aimed at the industry in the form of a new revenue gereartion source on the backs of those within the business of chemistry. Please rethink the premise of a tax in the first place. The legislators are stating that this initiative needs "teeth". Incentives, rather than taxes, are what is needed.
The concept of "mil tax" is familiar to the chemical industry.
The important question is for what will the moneies derived be used: penalization?, enforcement of standards? destruction of waste? technological exploration into waste re-use?
Taxes, whether used as incentives for safer chemicals or as penalties for hazardous chemicals, are one mechanism to reduce the use of hazardous chemicals and drive the development of safer alternatives. Whether this mechanism uses tax incentives for safer chemicals or tax penalties for hazardous chemicals, it is the tax differential for hazardous versus safe chemicals that could create the desired incentives and disincentives. If California chooses a tax mechanism to promote safer chemicals, the tax differential must be large enough to 1. drive changes in the market; 2. fully account for the external costs associated with using hazardous chemicals, and 3. offset the costs of a regulatory program focused on reducing the use of hazardous chemicals. We are not aware of a well-developed model for using a tax system as a general mechanism to protect public health and the environment from chemical hazards and drive the market to use safer chemicals. Instead, regulatory approaches have been demonstrated to be effective in driving change, Consequently, any tax program must be supported by an effective regulatory structure.
Determining the appropriate tax rate for California will require an understanding of the true costs of using hazardous chemicals. The recent Green Chemistry reports from the University of California document both the enormous amount of damage to human health and the environment that is being externalized onto society by industrial chemicals, as well as the enormous data gaps in our understanding of the details of which chemicals are capable of and are causing that harm, or the economic impacts on communities, government, and even businesses who are not considering the costs they bear related to worker absenteeism, health care, liability, environmental remediation, etc. Extensive understanding of this information would be required to develop an effective comprehensive tax system. Thus, these reports both justify imposition of extensive taxes to discourage use of hazardous chemicals and show how difficult structuring a comprehensive tax system would be to develop.
Accordingly, we believe 1) a focus on regulatory structures that force development of more information about chemicals and require industry to prove their chemicals are reasonably safe is more likely to be fruitful as a driver of change and 2) any tax system that is implemented to support the regulatory structure must be based on the true costs of hazardous chemical use, including economic externalities such as the costs to society and the environment.