“There’s a Very Fine Line Between Not Listening and Not Caring.”

A bill which would offer a sales tax exemption for energy-efficient appliances has been proposed in the General Assembly. The bill would designate April 19-29, 2009 (in commemoration of Earth Day), as a “Tax Holiday” in which the state would exempt certain consumer appliances designated as Energy Star?compliant as tax-exempt. The Environmental Protection Agency estimates that consumers who use Energy Star products can reduce their energy use and save up to $600 in utility costs annually.

I have mixed feelings about this. On the one hand, encouraging energy conservation is a good thing, particularly through voluntary incentives such as the proposed bill. But on the other hand, this bill will have absolutely no impact on overall Missouri energy usage unless everyone goes out that week and buys new appliances.

Ideally, tax credits should not only have broad applicability (which this one has), but also be revenue-neutral (which this one isn’t). Clearly, the state will lose (some) money on such a tax credit, not only from the loss of sales tax, but also from the future loss of utility tax revenue — if the EPA report can be believed. I suspect the fiscal effect would be minimal, but if the state is going to lose revenue, presumably there should be a tangible accounting benefit. For example, tax credits such as those detailed in our tuition tax credit proposal (you knew this was coming) offset the loss in tax revenue by reducing state spending, actually netting annual fiscal savings. If tax credits aren’t revenue-neutral, they run the risk of being used as a political tool.

So I guess I’ll leave it at this. My feelings on a “green” sales tax exemption?

Ehh?