More About the VCAT

If we accept that certain assets, such as water, air quality, and public land are or should be owned by all citizens and future generations of Vermont, then the monetary advantages of owning those assets should pass to those parties as well. There are a variety of ways in which to capture revenue from common assets. Methods include:

• Charging royalties (essentially fees) for the use or extraction of resources, such as groundwater or timber from state owned forests.
• Pollution taxes that charge polluters for damaging a common asset, such as air or water quality.
• Instituting a land tax, which taxes land at the value of its most beneficial economic use and not the buildings or structures on it. This has the triple effect of reducing sprawl by incentivizing compact development, negating land speculation (since land value increases transfer to the government via the tax), and promoting economic and private development (since taxation is now attached to the land and not what is built on it).

The above represent the first half of the “Green Tax Shift,” which promotes the idea of, “taxing bads not goods.” Since taxes act as a disincentive for behavior we should tax undesirable outcomes such as resource use, land use, and pollution, while simultaneously reducing taxes on income, wages, and investments in productive activities, things we want to encourage.

The revenue gathered from common assets through some of the above methods will be kept in a trust fund. This trust fund will be monitored and managed by a board of trustees who have a fiduciary responsibility to manage it first for future generations, and second for the well-being of all citizens. The responsibility of the board is to insure that the principle of the trust does not decrease, and that any and all expenditures, either as dividends to all citizens or as investments in the improvement of public goods, are paid strictly out of the interest on the fund.

This is how Alaska’s Permanent Fund for oil resources is managed. The companies extracting oil there pay royalties, which are kept in a trust fund. Every year, the interest gained on the fund is distributed as a dividend to all citizens (hence the example of the check on the main page). There is additionally the option of investing ALL of the funds in improvement of public goods. Though this would strategically change the fundamentals of the trust fund, the basis on which money is collected would be the same.

As an example, the Fish and Wildlife’s management of deer hunting is an existing trust fund that is already managing a common resource. The deer population of Vermont belongs to all citizens; therefore the right to hunt them is managed through hunting licenses and deer tags. If you want to hunt a deer you must pay to do so (royalties), and the number of deer takes the state permits each year is controlled with the health of the deer population in mind. As such, not only is the deer population sustainably managed for future generations, but the state also gains a source of revenue to continue management into perpetuity.

S.44-Vermont Common Assets Trust Fund Bill

H.385-An Act Relating to Establishing a Vermont Common Assets Trust

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Contact: Gary Flomenhoft | gary.flo@uvm.edu