Property Rights and Pigovian Taxes.

EXTERNALITIES; TAXATION; PROPERTY rights; PROPERTY tax; SUBSIDIES; WELFARE economics; CIVIL rights

The sad fact of the general Pigovian tax approach to externality is that the application of such mechanisms by governments appears to be inversely related to the extent of neoclassical protestation on the correct structure and magnitude of the tax. With very few exceptions, there appears to be little notice or concern within the orthodoxy of the question as to why Pigovian taxes are not favored in legislative proposals or, for that matter, supported by the public in general. The orthodox approach to resolving externalities may involve the creation of markets, the implementation of taxes, or various forms of regulation, quotas, standards, subsidies and mergers. The implementation of the remedial tax mechanism ensures that certain individuals do now have the duty to pay the tax under given conditions, while some other persons have the right to receive compensation for any damages borne by them. By implementing a Pigovian tax, the responsible government is legislating that priority will be given to the affected party, who is now entitled to either protection from external costs or, alternatively, to the gains from relevant external benefits.