BWorld 185, Lower taxes via more mineral exports

* This is my article in BusinessWorld last February 6, 2018.

Countries that impose zero income taxes on their nationals are dependent on extracting and exporting their natural resources such as oil and natural gas. Qatar, Bahrain, Brunei, Kuwait, Oman, Saudi Arabia, and United Arab Emirates are examples of such countries.

Instead of minimizing the extraction of these fossil fuels (and keeping them in the ground, as advocated by environmentalist groups), these countries extract these resources big time, export them to the rest of the world, and sustain their governments’ economic and social programs without creating or imposing any income tax.

This is a lesson for the Philippines with an estimated $1 trillion worth of mineral reserves.

On the graph are data from the US Geological Survey (USGS)which indicates that worldwide, the Philippines has the 5th largest estimated reserves in nickel and 4th largest reserves in cobalt. Cobalt is largely used to produce batteries for electric vehicles.

The reserves/production (R/P) ratio is computed here, the ratio represents estimated number of years before the reserves are depleted on the assumption that both R and P numbers will not change, which is unlikely because modern and evolving technology through time will continue to discover bigger reserves, or improve the utilization of existing reserves (see table).

  

The Philippines’ R/P ratio of 21 years for nickel is short compared to global average of 35 years but longer than Indonesia’s 11 years. There is a need to continue exploration of other nickel deposits in the Philippines as well as optimize the recovery of this and other metals per ton of metal ores extracted.

Our R/P ratio of 70 years for cobalt is good, higher than the global average of 64.5 years.

As more countries demand more electric vehicles (cars, motorcycles, buses, trucks), the global appetite for cobalt will rise quickly. China is currently the biggest importer and consumer of cobalt as it aims to produce more electric vehicles in the medium to long term.

The rising demand for cobalt relative to supply is shown in its rising prices, currently at $36/pound, the highest since some 15 years ago except for 2008-2009 global financial turmoil where cobalt prices peaked at around $53/pound.

Nickel prices have declined to around $4/ton in 2015-2016, now recovering upwards at current prices of around $6+/pound.

So there are big potential for more investments, more jobs, more government tax revenues, from nickel and cobalt alone.

Then there are big potentials for copper and gold mining in this country — if the Tampakan and Silangan projects would push through. Tampakan, estimated to cost $5.9B in project development, will be the single biggest foreign direct investment in the Philippines. For its part, Silangan is worth about $2 billion.

In 2015, the Philippines produced an estimated 83.8 tons of copper metal content, and 20.6 tons of gold metal content. These are small amounts compared to the big global producers of copper: Chile 5,764 tons, China 1,710 tons, Peru 1,700 tons, US 1,380 tons.

Also in that year, the big gold producers were China with 450 tons, Australia with 278 tons, Russia with 252 tons, and the US with 214 tons.

The uncertainties in the mining sector continue to linger even after the Commission on Appointments has rejected former DENR secretary Gina Lopez in May 2017. The new Secretary Roy Cimatu has not yet formally lifted the closure orders for some mining firms and the debate on open pit mining still continues.

The big mining potentials of the Philippines on four metals alone — nickel, cobalt, copper and gold — when realized by removing the endless uncertainties and by relaxing the various anti-mining policies, will allow the country to significantly reduce income tax rates.

Government should have no “right” to confiscate plenty of resources from the pockets and savings of people and private enterprises, especially where there are plenty of private provisions of infrastructure via integrated PPP, private education, private health care, private housing, private security and peace and order.

Bigger mining revenues and mining taxes through lesser anti-mining policy uncertainties will be a key measure toward lowering income taxes, both personal and corporate, in the medium to long term.

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See also:
BWorld 182, Asia Liberty Forum 2018 in Jakarta, January 31, 2018 

BWorld 183, Why low or zero income tax can mean more development, February 09, 2018

BWorld 184, ERC paralysis and implications for consumers, February 11, 2018

BWorld 170, The Habito carbon tax distortion

* This is my column in BusinessWorld on December 7, 2017.

Very often, the purpose of government is to make cheap things become more expensive. It does this via high and multiple taxes, regulatory fees, mandatory contributions, and multiple permits and bureaucracies that raise the cost of compliance. Many governments display hypocrisy when they say that they want to control inflation yet create those multiple taxes and bureaucracies that create inflationary pressure.

In the energy sector, the most recent proposed tax hikes are in the excise tax of oil products of up to P6/liter, and a big jump in excise tax of coal also known as “carbon tax” from the current P10/ton to P300/ton. The original bill by Sen. Sonny Angara proposed a hike from P10 to P20/ton but last week, an amendment by Sen. Joel Villanueva and followed up by Sen. Loren Legarda changed this to P300/ton.

Romeo Bernardo in his BusinessWorld column last Monday “The Gravy TRAIN is leaving and common sense isn’t in it” estimated that “The P300 per metric ton tax on coal will add P0.14 per kWh to our cost of generating electricity. This is on top of… feed-in-tariffs (FiT), a fancy term for what are just subsidies from the taxpayer. Combined, they will add P0.43 per KWh to our electricity bills or, at current consumption levels, a total of P40 billion for 2018.”

That is huge, a big government-instigated expensive electricity measure via legislation. In 2016, coal power constituted only 34% of total installed capacity in the country but contributed 48% of total electricity production. If the distortion created by priority and mandatory dispatch to the grid of solar-wind even if they are expensive (feed-in-tariff or FiT of up to P10+/kWh for solar and P9+/kWh for wind, more than 2x the price of coal and natgas) and intermittent, the share of coal electricity production can easily reach 50%.

The earlier proposal by former NEDA secretary Ciel Habito to impose a carbon tax of P600/ton has something to do with this. It is a lousy proposal yet it emboldened the legislators to make cheap and stable energy from coal become more expensive.

When Dr. Habito wrote his article at the Inquirer last September 2017, coal prices were around $60/ton, not $80 as he claimed. So $60 x P51/$ = P3,060/ton. His distorted proposal of a tax of P600/ton would be equivalent to 19.6% tax, not 15%. So the legislators may perhaps claim that at least they did not follow the distorted logic of P600/ton Habito proposal and they proposed only P300/ton.

I was wondering about Dr. Habito’s inconsistencies. One, he frequently advocates expensive electricity via high coal and carbon tax with about four articles at the Inquirer since June 2017. Two, no advocacy for high carbon tax of natural gas/LNG which are also fossil fuels. And three, silence in expensive electricity via guaranteed high price for 20 years also known as FiT for wind-solar. To say that the impact of the coal tax on electricity prices will be small is a cavalier attitude on price increases when he’s not the only one paying for it.

Romeo Bernardo has a point when he further wrote in his article, “why single out coal for a carbon tax? Why not a carbon tax on every fuel based on its impact on the ozone layer (which incidentally should also include LNG)?”

Our electricity prices are already heavily distorted with about 10 different items and charges in our monthly electricity bill. Generation charge, transmission charge, distribution charge, supply charge, system loss charge, universal charge, metering charge, lifeline rate subsidy, taxes, FiT. For consumers such as households with about 600+ kWh consumption, industrial users, there are 2 other charges (total 12), like environmental tax.

The FiT keeps rising from 4 centavos/kWh in 2015 and now 18 centavos with a pending hike to 29 centavos/kWh late this year. Very likely it will no longer be granted so Transco will likely ask for 32 centavos/kWh or higher early next year. Add 32 centavos subsidy for expensive and intermittent renewables + 14 centavos coal tax and soon we shall have 56 centavos/kWh of unnecessary and distortionary extra cost in expensive electricity.

The continued favoritism of renewables while penalization and demonization of coal and fossil fuels is triggered by continued climate alarmism. Whether we have less rain, no rain or lots of rain; whether we have no flood or lots of flood; whether there are few storms or lots of storms, whatever weather and climate, the alarmism movement suggests that we should pay more expensive electricity, we should send more money to the UN, WB, ADB, CCC, WWF, etc. We should get more climate loans, more renewables loans, and cronyism. It is a lousy movement.

Coal power and fossil fuels are responsible for higher productivity of the poor and cheaper electricity for households and industries. We have a rising life expectancy, rising per capita GDP despite rising population because of the rise in overall human productivity, thanks to coal and fossil fuels.

The House of Representatives should counter the high coal tax proposal of the Habito-inspired Senate bill. The various tax-tax-tax under TRAIN should not add more distortions and inflationary pressure in our daily electricity consumption.

Bienvenido S. Oplas, Jr. is President of Minimal Government Thinkers, a member-institute of Economic Freedom Network (EFN) Asia.

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See also: 
BWorld 160, A high carbon tax is irrational, October 25, 2017 

BWorld 163, US energy policies and implications in Asia and Philippines, November 19, 2017 

BWorld 166, US energy trading and implications for Asia and Philippines, November 26, 2017 

BWorld 167, Multilateral, bilateral, or unilateral liberalization, November 27, 2017
BWorld 168, Uncertainty in mining policy and the Manicani debate, December 12, 2017 

BWorld 169, On tobacco tax and plain packaging, December 12, 2017

BWorld 160, A high carbon tax is irrational

* This is my article in BusinessWorld last October 19, 2017.

Political science masquerading as climate science insist that the gas that we humans and our animals exhale, the gas that is used by trees, flowers, fruits and other crops to grow and feed the world — carbon dioxide or CO2 — is a pollutant that must be over-taxed and over-regulated.

Far from the truth. CO2 is a useful gas, not a pollutant.

Since it is useful, the optimal carbon tax for coal in particular is not P10/ton, not P20, not P600, but zero. However, a zero tax on coal is unpopular from the world of climate alarmism, so we classify these tax rates as follows: P0 tax is optimal, P10/ton is rational, P20/ton is compromise, P600 is irrational.

Recently, eminent economist Dr. Ciel Habito made a follow-up paper, “The case for the carbon tax” and insist that the carbon tax for coal should be raised from the current P10/ton to P600/ton.

To support his claim, he used some ridiculous numbers that are peddled by the watermelon (green outside, red inside) movement. Here are two:

(1) “Dominated by CO2 (72%), GHGs trap heat… .”

Wrong. CO2 is 400 ppm or only 0.04% of all greenhouse gases (GHGs). About 95% of GHGs is water vapor — the clouds, evaporation from the seas, oceans, lakes, rivers, stomata of leaves, etc. The remaining 4%+ are methane, nitrous oxide, others.

(2) “CO2 averaged about 280 parts per million (ppm) for the last 10,000 years…In 2015… 400 ppm for the first time…. now triggering much more frequent extreme weather events.”

This is perhaps 5% geological science and 95% politics.

The Minoan, Roman, and Medieval Warm Periods (when there were no SUVs, no coal plants, no airplanes) were much warmer than the Modern Warm Period (mid-1800s to roughly 2000). There were wild swings in global warming and global cooling cycles regardless of the CO2 level. How would one call this — “much less frequent extreme weather events than today?” Garbage.

Climate change (CC) is true. All skeptics recognize climate change, recognize global warming. Planet Earth is 4.6 billion years old and there were climate change all those years because climate change is cyclical (warming-cooling-warming-cooling…) and natural. Global warming is true, and so is global cooling.

It is political science that masquerades as climate science to say that there is no climate cycle, that there is no global cooling that takes place after global warming.

BACK TO COAL POWER.

From the recent energy and economic experience of our neighbors in Asia and some industrial countries in the world, the hard lessons are these: (a) Countries that have coal consumption of at least 2.1x expansion over the past two decades are also those that experienced fast GDP growth of at least 3x expansion.

Prominent examples are China, India, South Korea, Indonesia, Vietnam, Malaysia, Philippines, and even Pakistan. And (b) Philippines’ coal consumption is small compared to its neighbors; its 2016 use is just nearly 1/2 of Malaysia and Vietnam’s, just 1/3 of Taiwan’s and almost 1/5 of Indonesia’s, 1/6 of South Korea’s, 1/9 of Japan’s. (see table)

A high carbon tax is irrationalI have repeatedly argued that CO2 is a useful gas. For those who insist that CO2 is a pollutant, they can certainly help curb further CO2 emission even without legislation and carbon taxation through the following:

• Stop breathing too often; more exhalation means more CO2 emission.

• Stop adopting pets (if any), stop eating chicken, pork, meat because these animals exhale CO2.

• Stop using their cars, not even jeepneys or buses, they emit CO2; skateboards and bicycles only.

• Stop riding airplanes and motorized boats, they emit CO2; solar planes or big kites and sailboats only.

• Stop connecting from the grid and from Meralco because 48% of nationwide electricity generation comes from coal; no gensets either. Use only solar-wind-biomass + candles at home.

• Tell their friends, business associates, family members, to do the same so that there will be more people emitting less CO2.

The Habito proposal of more expensive electricity via P600/ton carbon tax on coal is dangerous because while the Senate version of TRAIN adopts a P20/ton excise tax, the P600 can spring up somewhere during the final and Bicameral Committee meeting. The proposal should be exposed as based on political science, not geological or climate science.

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See also:
BWorld 148, Energy Trilemma Index 2016, September 16, 2017 

BWorld 157, Build-build-build is possible without new taxes, October 09, 2017 

BWorld 158, Why a carbon tax is wrong, October 16, 2017 
BWorld 159, Electoral reforms and the President, October 19, 2017

BWorld 158, Why a carbon tax is wrong

* This is my article in BusinessWorld last week.

Coal power produced nearly 48% of Philippines’ actual electricity generation in 2016 despite having only 34.6% share in the country’s installed power capacity of 21,400 MW or 21.4 GW, Department of Energy (DoE) figures show.

Renewables (hydro, geothermal, wind, solar, biomass) produced 24.2% of total power generation in 2016 despite having 32.5% of installed power capacity. In particular, wind + solar combined contributed a small 2.3% of total power generation.

At a forum organized by the Energy Policy Development Program (EPDP) at the UP School of Economics last Oct. 5, the speaker Dr. Francisco Viray, former DoE secretary and now president and CEO of PhinMa Energy Corp., showed in his presentation a screen shot of Dr. Ciel Habito’s article, “Let’s get the carbon tax right.” Ciel was arguing among others, that the carbon tax for coal power should be raised from the current P10/ton to P600/ton and not P20/ton as contained in Senate bill No. 1592 of Sen. Angara.

I commented during the open forum that Ciel’s article in reality has a wrong title, it should have been “A carbon tax is wrong.” And here are the reasons why.

One, as mentioned above, coal power was responsible for nearly 48% of total electricity generation nationwide in 2016 and it is wrong to restrict its supply and/or make its price become more expensive. Kill coal or even drastic cut in coal power would mean massive, large-scale, and nationwide blackouts for several hours a day, something that consumers wouldn’t want to endure. After all, even a one minute brownout can already cause widespread disappointment.

Two, the Philippines’ overall coal consumption – in absolute amount and in per capita level – is small compared to the consumption of its neighbors in Asia (see table).

The Philippines has only 100 kilos or 0.1 ton per head per year of coal, the smallest in the region. There is no basis to suggest restricting further coal use given the fast demand for electricity nationwide.

Three, it is wrong to advocate more expensive electricity via high carbon tax given that subsidies to renewables via feed-in-tariff (FiT), among others, are already adding upward price pressure. A higher carbon tax may be more acceptable to the consumers if the FiT scheme is discontinued and ultimately abolished. If this is not done, better to keep coal excise tax as low as possible.

The proposed P600/ton excise tax on coal power would translate to P0.24/kWh hike in power generation charge. Using Ciel’s numbers, one ton of coal can generate 2,519 kWh electricity on average. So P600/2,519 kWh = P0.24/kWh. That is equivalent to FiT-Allowance that each electricity consumer from Luzon to Mindanao must pay monthly for many years to come.

Four, it is wrong to demonize and over-regulate carbon dioxide (CO2) as a pollutant because it is not. CO2 is invisible, colorless, and odorless unlike those dark smoke coming from vehicles and chimneys of old manufacturing plants.

CO2 is the gas that humans and animals exhale, the gas that flowers, trees, rice and other crops use to produce their own food via photosynthesis. More CO2 means more plant growth, faster greening of the planet. CO2 therefore is a useful gas, not a pollutant gas that the UN, Al Gore, and other groups and individuals would portray it.

While the hike in coal excise tax from P10 to P20/ton as contained in the Senate version is somehow acceptable, there is danger that the P600/ton proposal will spring out of nowhere during the bicameral meeting of the House and Senate leaders. This should not be allowed to happen.

Continued demonization of coal and rising favoritism of variable renewables like wind-solar would mean more expensive electricity, more unstable grid, and darker streets at night. Dark streets would mean more road accidents, more robbery, more abduction and rapes, more murders as criminals benefit from anonymity provided by darkness.

Energy irrationality can kill more people today, not 40 or 100 years from now. The irrationality and insensitivity of rising government taxes should be restricted and limited.

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See also:

BWorld 155, Electric cooperatives and system loss, October 02, 2017 

BWorld 156, Integrated PPP vs hybrid PPP, October 04, 2017 

BWorld 157, Build-build-build is possible without new taxes, October 09, 2017

Energy 95, Al Gore's $15-T carbon tax racket

According to the bible of Al Gore, the UN and other groups/individuals, we should be guilty that we are riding cars, jeepneys, buses, motorcycles, airplanes, boats, other machines that use fossil fuels. We should be riding only cows, horses, bicycles, skateboards other things that do not use fossil fuel. We should be guilty that we have 24/7 electricity mainly from base load coal and natgas power plants. Thus, we should send them more money via carbon tax so that they can "save the planet." Nice but not-so-brilliant global robbery scheme.

http://www.washingtonexaminer.com/a-fools-errand-al-gores-15-trillion-carbon-tax/article/2622479

The purpose of a carbon tax is to make cheaper energy, cheaper transpo, cheaper manufacturing, become expensive. National governments, the UN and Al Gore will get the extra money, trillions of $ of money and they will "save the planet". http://www.carbontax.net.au/category/what-is-the-carbon-tax/

Al Gore, Obama, di Caprio, Richard Branson, etc., they hate fossil-fuel-guzzling airplanes a lot. https://wattsupwiththat.com/2015/04/20/want-a-green-pass-you-fly-your-own-private-jet-heres-how/

Meanwhile, the WB, IMF, ADB, DOF, etc already made a chorus that petroleum is a "public bad" because our use of cars, buses, boats, motorcycles, airplanes are bad for the environment, so they are raising the excise tax of petrol products by P6/liter across the board. Some legislators are not satisfied with this, they want additional tax on petrol products, coal power plants, etc. to get more money to "save the planet." http://www.philstar.com/science-and-environment/2016/11/10/1642091/carbon-tax-eyed-philippine-polluters

People who are "non-polluters" are those who have zero demand for fossil fuels like petroleum and coal power plants. Like those who live in the caves, those who only ride horses, carabaos, bicycles or just walk/run only. For their trips to far away provinces and countries, they ride flying witches like manananggals that do not use fossil fuels.

The ecological socialists partner with "cap-carbon" capitalists for a multi-trillion dollars robbery of energy consumers. New racket indeed, but it is bound to fail. People hate more expensive energy, more government/UN taxation.

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See also:

Energy 92, Asia retains big coal use, April 07, 2017 

Energy 93, Coal imports in East Asia, April 10, 2017 

Energy 94, Developing Asia's love affair with coal, May 07, 2017 
Al Gore politics in Manila, June 10, 2010 Weekend fun 3: Al Gore cartoons (A), December 04, 2010

Energy Econ 23: Death of Australia's Carbon Tax

Today, Australia officially killed the onerous and climate alarmism law, carbon tax. I am posting below portions of selected news reports on the subject.

From The Australian today, 

The Prime Minister, while claiming victory after a five-year campaign against carbon pricing, also launched a new campaign against the Labor Party’s promise to take a replacement emissions trading scheme to the next election.

And from the WSJ today,  

"He said the carbon price was acting as a A$9 billion a year handbrake on the economy, which was adjusting to the end of a record mining investment boom that helped shield Australia through much of the recent global economic downturn....

The carbon tax has affected industries ranging from mining and energy to aviation, and was widely opposed by manufacturers and a majority of business representative groups including the country's main chamber of commerce....

Airline operators also said they had been hurt badly by the tax, at a time when intensifying competition in Australia's domestic travel market was already driving down ticket prices. Virgin Australia Holdings Ltd. VAH.AU 0.00% said it lost A$27 million in the six months through December 2013 due to the carbon tax, saying it couldn't pass costs on to passengers because of stiff market competition. It reported a first-half loss of A$83.7 million."

Earlier, WUWT, June 10, 2014, noted the alliance between the two leaders of Australia and Canada. 

“It’s not that we don’t seek to deal with climate change,” said Harper. “But we seek to deal with it in a way that will protect and enhance our ability to create jobs and growth. Not destroy jobs and growth in our countries.”

From Ottawa Citizen,

Abbott, whose Liberal party came to power last fall on a conservative platform, publicly praised Harper for being an “exemplar” of “centre-right leadership” in the world.

Abbott’s government has come under criticism for its plan to cancel Australia’s carbon tax, while Harper has been criticized for failing to introduce regulations to reduce greenhouse gas emissions in Canada’s oil and gas sector.

From International Business Times (IBT) Australia, June 10, 2014, 

Tony Abbott to 'Forge Alliance' to Counter Obama's Efforts to Push Climate Change on Top

Abbott, who is visiting Canada for talks with the country's prime minister and his close friend Stephen Harper, said efforts are underway to form a new "center-right" alliance under the leadership of Canada, UK, Australia, India and New Zealand....

In a report by the Sydney Morning Herald, it said the alliance may be a "calculated attempt" to push back on what both Mr Abbott and Mr Harper sees as a "left-liberal agenda" to raise taxes and "unwise" plans to address the issue of global warming.

  

From The Telegraph, June 10, 2014,

""Like-minded” countries such as Britain, Canada and India should form a conservative alliance with Australia to limit action on climate change and to prevent the introduction of carbon pricing, the country's prime minister Tony Abbott has said.

Seeking to counter Barack Obama’s efforts for international action to reduce carbon emissions, Mr Abbott has reportedly sought to create a “combined front” with fellow Commonwealth nations that have conservative governments."

September last year, Tony Abbott also abolished the Ministry of Climate Change, helped shrink the size of Australian government.

From pointcarbon.com,

AUSTRALIA AXES MINISTERIAL ROLE FOR CLIMATE CHANGE

16 Sep 2013 09:40 Last updated: 16 Sep 2013 09:51

BEIJING, Sept 16 (Reuters Point Carbon) - The new Australian Cabinet will be the first in six years to not have a ministerial role for climate change issues, merging instead global warming with the wider environment portfolio.

Announcing his Cabinet on Monday, incoming Prime Minister Tony Abbott appointed Greg Hunt, the Liberal-National Coalition’s spokesman on climate change issues since 2009, as the new Minister for the Environment.

So, RIP, carbon tax, at least in Australia.

I hope that other developed countries will realize the folly of making things, from electricity to manufacturing to mining to flying and tourism, become more expensive than what they should be. People want affordable products and services so they can live a more prosperous, more comfortable life. It is the reward for their hard labor and work efficiency.
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See also:
Energy Econ 16: Electricity and Development, March 20, 2014

Energy Econ 19: Wind Power, Feed in Tariff and Electricity Subsidy, April 23, 2014

Energy Econ 20: On Slashing the Max Power Generation Charge, May 05, 2014

Energy Econ 21: Joint Statement on EPIRA Implementation, May 27, 2014

Energy Econ 22: FEF on FIT for Solar Power Plants, June 13, 2014

Climate Tricks 23: Using Typhoon Haiyan for Climate and Energy Rent-Seeking

Below is an abridged article written two weeks ago by a friend, Vice President of Reason Foundation http://reason.org/, Julian Morris. He is also the former Executive Director of the International Policy Network (IPN, London). The full article with two charts is here. I added the chart below and is not part of his original paper.
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The Terrible Toll of Typhoon Haiyan Doesn't Excuse Bad Policy

Julian Morris

November 19, 2013

The terrible toll of Typhoon Haiyan—estimated to have killed more than 4,000 people—reminds us of the often awesome power of the weather. Some say the death and destruction in Asia are symptoms of climate change and that we can expect worse to come—unless we cut back on emissions of greenhouse gases. Coincidentally, negotiators from around the world are meeting in Warsaw, Poland this week and next to attempt to hammer out a deal that would do just that. But cuts in emissions of greenhouse gases may not be the best way to address the threat of hurricanes and typhoons, even if climate change is making them worse.

When it hit the Gulf of Leyte in the Philippines, Haiyan had sustained winds of 145 mph, with gusts of up to 170 mph, making it comparable in intensity to the Great Galveston Hurricane of 1900, which had winds of approximately 145 mph at landfall on the Texas Coast. The loss of life in Leyte, currently estimated at between 3,600 and 4,500, may ultimately be as great or greater than Galveston, where between 8,000 and 12,000—a quarter of the town’s population—are estimated to have died, making it the most deadly natural disaster in U.S. history.

Some activists claim that Haiyan is a symptom of climate change and that it should be a wake-up call to take action to cut emissions of greenhouse gases. Even theologians are getting in on the act, saying that the typhoon is the result of the sin of climate denial! But those may not be the most appropriate lessons. First, because it is far from clear that global warming is leading to an increase in the number or intensity of typhoons and hurricanes. Second, and more importantly, even if global warming does result in more extreme weather events, cutting emissions will likely do little to reduce the damage they inflict, while potentially costing a great deal, thereby reducing people’s ability to take preventative or ameliorative action….

(Trend lines in global temperature, air (UAH and RSS), land + sea surface (HadCRU), land only (GISS) vs. global CO2 concentration in the atmosphere, January 1997 to October 2013)

Inequality 12: Billionaires and the UN Politics of Envy

The United Nations (UN) is one huge global bureaucracy. Its original mandate was to promote world peace and resolution of conflict between and among nations, that is why it was formed at the end of World War 2 in 1945.

Since then, the UN has grown into a web or dozens of tentacles of different bureaucracies with concerns on almost all sectors. This somehow confirms one important role of the bureaucracy – once it is created, it only wants and aspires to perpetuate itself forever.

More than a year ago, I compiled a list of the different offices and agencies under the UN, I counted at least 131 of them, ranging from the Security Council and ILO, down to the UN World Tourism Organization. See the list here, UN bureaucracies – too many.

.

From the long list of UN bureaucracies, and I think that list is not complete yet,  many UN officials are getting uneasy: who will feed them and sustain their high, tax-free salaries and perks, now that the rich governments, previously the main contributors to the UN and its dozens and dozens of bureaucracies, are having huge fiscal problems. If those rich governments can cut certain subsidies to their own people and taxpayers, then the international and multilateral bureaucracies could be next in the chopping block.

Late this week, there were several reports with headlines like UN calls for ‘billionaires’ tax’ to help world’s poor. Many rich country governments reeling from cut back their contribution to foreign aid. In 2011 for instance, foreign aid flows have declined by $167 billion.

So fearing the scary scenario that the budget and spending power of the UN and its many attached offices and going to decline, they have produced this fantastic plan of creating new taxes purportedly to “save the planet”, “save the dolphins and polar bears”, “save the poor”, etc. Me thinks that deep inside, many will not admit what they really wish to whisper, "save our pockets and lifestyle"..

Here is a list of the potential taxes proposed by the UN:WESS and the potential revenues they can give to the UN”

1.  A tax of $25 per tonne on carbon dioxide emissions. It could be collected by national governments, but allocated to international cooperation -- about $250 billion.

2. A tax of 0.005 percent on all currency transactions in the dollar, yen, euro and pound sterling.   a tiny currency transaction), which could yield an estimated 40 billion U.S. dollars per year for international cooperation - could raise about $40 billion a year.

3. Earmarking a portion of a proposed European Union tax on financial transactions for international cooperation – projected tto raise more than $70 billion a year.

4.  Regular allocations of he special drawing rights (SDRs) of the International Monetary Fund (IMF) and use of "idle" SDRs could yield about 100 billion U.S. dollars per year for the purchase of long-term assets which would then be used as development finance.

Overall, the various  billionaires’ tax will help raise more than $400 billion a year.

What's wrong with being billionaires? Take these two examples.

First, a bunch of science geeks and nerds made a grand conspiracy -- to create or invent a rice or potato variety that is packed with certain nutrients and vitamins that will improve or boost its consumers' immune system against certain infectious diseases. It's like an indirect vaccine against certain diseases minus the injections. Various laboratory and clinical trials prove that their invention was successful -- safe, effective, no negative side effects, etc. It became a hit worldwide, the geek inventors are selling their rice at P80 per kilo equivalent, millions and millions of people in Asia and elsewhere are buying their rice, the geeks became super-super rich, they became multi-billionaires.

Second, another bunch of information and communications technology (ICT) geeks and their investors also made their own big conspiracy – to produce cool smart phones and allied gadgets that can carry most if not all functions of separate gadgets, like internet and email access, a video-camera, a radio, tv, organizer and so on – at a much cheaper, really affordable prices. Even rural farmers can afford to purchase them and their kids help them to see some  graphs of price and quantity movements of their crops as sold and traded in various public markets and groceries. Tens of millions of people worldwide are buying these new products from a new company, the geeks and their investors have become very rich, some have become multi-billionaires

The UN officials now think that those geeks and risk-taking investors and entrepreneurs owe the UN and the world some debt, or they committed a crime of being highly efficient and  hard-working, highly successful, that these billionaires should pay lots of taxes to their national governments, and lots of additional taxes earmarked for the UN, so that the UN guys will save the planet, save the poor against certain infectious diseases, save them from illiteracy and the “digital divide”.

This is a highly rent-seeking if not idiotic argument. These days, people can become very rich mainly by producing certain goods and services that really benefit humanity. Exception are  certain politicians becoming very rich.via dictatorship and/or heavy economic protectionism of their family-owned or crony-owned local companies.

So the proposed new taxes by the UN are mainly rent-seeking, distortionary measures driven mainly by the politics of envy while mouthing some bleeding heart developmental concerns.  

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See also:

Inequality 6: On Social and Class Dominance, May 13, 2011

Inequality 7: Roger Federer, Manny Pacquiao and Free Market, June 19, 2011

Inequality 8: On Sustainable Inclusive Growth, June 23, 2011
Inequality 9: CMFR Forum on Inclusive Growth, September 22, 2011
Inequality 10: On Urban Congestion, January 05, 2011

Inequality 11: Banks, Filipino Savings and the BSP, April 21, 2011