Tax Strategies To Deal With An Environmental Disaster

Abstract

Abstract In the last few years, the world has witnessed three major environmental disasters: a destructive tsunami in Southeast Asia; a devastating hurricane in the New Orleans area of the United States; and a disastrous earthquake in Pakistan and India. In the short term, government units responded to these disasters with medical assistance, temporary housing, and food relief for disaster victims. In the longer term, however, it is up to the citizens in a disaster area rather than the government to lead in disaster recovery efforts. The government, though, can and should assist in these redevelopment efforts in various ways. One way is to provide tax relief to disaster victims to help them overcome their losses and to provide tax incentives to encourage redevelopment in the disaster areas. Environmental taxation deals with the use of tax policy to promote environmental goals. When a natural disaster occurs, a significant disruption has taken place in the environment. Government bodies and other interested parties should take steps to reverse this environmental damage with enlightened policies for disaster recovery. Environmental taxation policies can be useful in assisting with these disaster recovery efforts. In this chapter, the authors review various environmental tax strategies used by the Federal government to support economic redevelopment in the New Orleans area after Hurricane Katrina struck the area in 2005. The authors also analyse whether key provisions of two hurricane tax acts passed by the United States Congress support their intended purpose.