How Oil Money Might Help Reduce Inequality In Brazil
How Oil Money Might Help Reduce Inequality In Brazil
By Andrew Breiner on August 22, 2013 at 8:47 am
Brazilian President Dilma Rousseff is celebrating a new law, passed Monday, that will direct all profits the government receives from oil drilling to education and health spending. The law was passed in response to the mass protests that rocked the country in June, demanding increased spending on public goods.
It’s an approach that fits with the focus on economic equality that has characterized Rousseff’s presidency, which has seen steadily diminishing levels of inequality. Her approach is a marked contrast to the U.S. system of royalties, which go into general government treasuries, and to repair and conserve drilling-damaged land.
Energy companies pay royalties to the government when they extract oil, gas, or coal out of the ground on publicly-owned land. They are taxpayers’ resources, so companies are expected to compensate taxpayers for what they’re taking, in the form of a percentage of what they extract. They can also help account for the true costs of drilling, so companies pay appropriately for the environmental degradation and carbon pollution it causes.
But in the U.S., for example, just $12 billion went to the federal government and $2.1 billion to states during fiscal year 2012. Considering the environmental damage and strain on infrastructure that drilling imposes, governments need that money just to cope.
More:
http://thinkprogress.org/climate/2013/08/22/2499851/oil-royalties-inequality/