December 19, 2009
In case the idea of having your electric bill jacked way up and losing thousands of jobs in an all ready strapped economy wasn't quite enough to convince you that cap-and-trade is a terrible idea that just leads to more taxes, we have this delightful story from Europe:
In a statement released last week, the Europol police agency said Europe's cap-and-trade system has been the victim of organized crime during the past 18 months, resulting in losses of roughly $7.4 billion. The agency, headquartered in the Netherlands, estimated that in some countries up to 90 percent of the entire market volume was caused by fraudulent activities.
"These criminal activities endanger the credibility of the European Union Emission Trading System and lead to the loss of significant tax revenue for governments," Rob Wainwright, Europol's director, said in a statement.
Launched in 2005, the Emission Trading System seeks to reduce greenhouse gas emissions -- which many scientists believe contribute to global warming -- by allocating carbon pollution allowances to member states to fulfill its obligations under the U.N.'s Kyoto Protocol. Companies that emit less than their allowance can sell the difference on the trading market to firms that exceed their established limits.
But, according to a diagram of these scheme provided by Europol officials, the accused traders would open an account in a national carbon registry and then purchased emission allowances without value added taxes from other companies in other countries. Those allowances were then transferred to the country where they were registered before the accused trader moves them to an unregulated broker, selling the allowances on a trading exchange, often through various buffer companies. Finally, the accused trader charges the value added tax on the transaction but does not submit that money to authorities.
Is it just me, or is this the equivilent of money-laundering? Way to fail, as usual, EU.
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