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Comment by NeedMoreTea | Hacker News Reader

When there is a tax on rubber duckies when used by the public or road hauliers, but not when used by aviators, there's a subsidy on aviation rubber duck use.

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The lack of a tax is not a subsidy. Just because something isn't as taxed as you think correct does not mean it is subsidized. Yes, you can argue that the lack of a tax is a "relative" subsidies but that's just an exercise torturing words until they say what you want them to.

Whether not taxing a particular thing is right or wrong is a totally separate issue.

The EU consider the lack of a tax on a specific sector to be a subsidy. e.g. The UK government's reduction in tax on domestic fuel bills amounted to a subsidy. That made the UK the EU's largest subsidiser of fossil fuels in the face of EU efforts to phase them out.

Good enough for me.

Edit: WTO definition of subsidies includes "government revenue that is otherwise due, foregone or not collected (e.g. fiscal incentives such as tax credits)". Pdf: http://www.wto.org/english/docs_e/legal_e/24-scm.pdf

That's a crazy definition. By that logic, every dollar up to the optimal point on the Laffer Curve is a "subsidy". Not taxing is not a subsidy. Also, I'm not really concerned how the EU defines any thing; I whole-heatedly disagree with almost every thing they do. The article is about America; we can stick with her definitions. Let's try "government hands you a check for doing something", which is basically what most economists use.

"The lack of a tax is not a subsidy." -- dsfyu404ed

Do you have a reference for that claim? Other sources explicitly count tax breaks as a type of subsidy, for instance

"In countries with well-developed tax systems, subsidies provided by reducing companies' tax burdens are commonplace. Examples include tax exemptions (when a tax is not paid), tax credits (which reduce a tax otherwise due), tax deferrals (which delay the payment of a tax) and a host of other instruments. In common language these preferential tax treatments are called tax breaks or tax concessions; public-finance economists refer to them as tax expenditures."

https://web.archive.org/web/20120905082615/http://www.iisd.o...

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