IN PURSUING a good end -- stronger federal efforts to clean up hazardous waste dumps -- the Senate Finance Committee has adopted a bad means -- a value-added tax (VAT) on manufactured goods. That's a mistake that the House Ways and Means Committee should quickly correct.
There is widespread agreement in Congress, fueled by strong public pressure, that the Environmental Protection Agency needs to move more aggressively on toxic cleanups. No one expects a fast windup to the problem -- estimates of the number of dangerous sites keep mounting even as the difficulties of dealing with them become more apparent. But a larger commitment of staff and money should bring faster progress both in the development of techniques and the containment of existing hazards.
With both the Senate Enviroment and Finance committees now agreed on spending $7.5 billion on Superfund over the next five years, and the House voting last year to spend more than $10 billion, a much expanded program is a near certainty. The biggest remaining issue is how to raise the money. Superfund now relies on a tax levied on raw chemicals and petroleum, a method that has the important virtue of putting the cost of cleaning dumps on those primarily responsible for their creation.
Chemical and oil producers are more or less resigned to the so-called feedstock tax at its present levels. But they argue that raising the tax to support a bigger fund would not only put them at a competitive disadvantage in the world, but would also be unfair. After all, much toxic waste comes not from the initial production of petrochemicals, but from their subsequent use by manufacturers and consumers. That's a fair point to which the administration responded this year by proposing to tax the actual disposal of waste in a way that would encourage generators of that waste to dispose of it in a safe manner.
The Treasury's original scheme taxed too heavily producers of large volumes of highly diluted waste. But that flaw was corrected during committee hearings. Still, some petrochemical manufacturers continued to push for an even broader basis of taxation, with the result that the Finance Committee decided to support the enlarged fund by a new tax on the sale or import of all raw materials, except unprocessed food products, and on the value added to those materials at each stage of the pro
The arguments against this special-purpose VAT are the same ones that apply to a general VAT. A VAT hits lower-and middle-income people much harder than the wealthy. And it would require construction of a whole new complex tax filing and collection system -- just what neither IRS nor businesses need. About the only interest it would serve would be derailing the administration's income tax reform proposals. Sneaking into the code a new, easily expandable revenue-raising device might be considered by some a good way to protect their favorite loopholes. That's not a purpose that Superfund ought to serve.