Tax Issues — Alternative Energy’s Albatross

Finally the people and the governments agree that alternative energy is essential, and are willing to put a bit of money where their mouths are. So why are investments in alternative energy sources diminishing, both from corporations and the government? The problems are legion, and one way or the other, it’s all about taxes.

For the established corporations, the government’s facile use of tax deductions has lost a lot of its value of late. In an economic time such as this, with huge layoffs, losses, and folding giants, there just isn’t much profit to shelter, and developments can’t be bankrolled unless the money is coming from SOMEwhere.

Tax break incentives work on the idea that the government will give the money up in arrears, after the funds have been invested, in lieu of taxes that the company would otherwise have been obligated to pay. But those tax obligations are only levied upon profits, so… no profit, no taxes owed, so no incentive after the investment is made. That part is relatively easy to remedy. The government can use grants instead, since it’s out the same amount of money either way. (This is a bit of an oversimplification, in that the government’s income is also down during times of little or no profit, but the initial concept remains valid.)

Using grants adds an advantage: It allows the little guys, start-up companies with great ideas, abilities and know-how, to become involved in alternative energy solutions. Such companies would otherwise pretty much be out of the running under other circumstances, unless they had huge backing from some invest who expected… well… to get the money back from tax incentives…. you see the problem?

The other way that taxes are an issue is a bit less comfortable to ponder. The government gets a LOT of money from taxes on gasoline. With alternative energy aimed at reducing (or ending) the use of fossil fuels, where will that tax money come from? When people generate their own electricity, that tax also goes away. How can the government continue to run and provide services without that income? Obviously, it will need to levy taxes in some other fashion in the long run. Meanwhile, though, taxing alternative energy producers is counterproductive, even if it could be accomplished, the balance between fossil fuel and alternative energy generation is in nearly constant flux (so a fair new system can’t yet be put into place,) and the governments are bleeding tax losses all over the place.

That we’re all finally getting friendly with Going Green is good news. Unfortunately, a river runs through it, as well – a river of tax dollars. Nobody said the transition was going to be entirely trouble-free. Eventually we will shed the albatross around our necks. The savings found in using alternative energy will help ease the change. Meanwhile, we can take good, sound comfort in knowing that we’re not going through these growing pains for no good reason. Petroleum and Europe’s recent gas crisis both prove that, though transitions may not always be easy, there’s still far more sense in Going Green.

Comments

Got something to say?






+ four = 5

Powered by Wordpress