Yesterday evening, Heritage spotted a conspicuous entry in the day’s publication of the Federal Register, defining a new tax on Christmas trees, which would fund a Christmas Tree Promotion Board. The story quickly blew up and went viral, and now the Administration is delaying implementation of the proposal.
The left has been quick to point out that the fee is welcomed by the industry, which wants the Christmas Tree Promotion Board to help reverse the downward trend in Christmas Tree sales versus their fake counterparts. They’ve tried creating a board in the past, it seems, but they kept falling apart as members were unable to overcome the free-rider problem, where none wanted to pay to benefit all. So in stepped government.
What’s wrong with this picture? It isn’t really the tax, which the government has falsely tried to claim is not actually a tax, which is both minuscule, amounting to 0.3% assuming an average tree price of $40.00, and welcome by the industry. The problem is the fact that government is once again picking industry winners and losers.
Consider this description of the rule from OIRA (emphasis mine):
The Christmas Tree Promotion, Research, and Information Order would be implemented under the Commodity Promotion, Research, and Information Act of 1996. The purpose of the new program would be to increase the demand of Christmas Trees in the United States. The proposed new program will assist the fresh Christmas tree industry to: develop and finance an effective and coordinated program to strengthen the position of industry; and maintain, develop, and expand existing markets for fresh Christmas trees. Over the past 15 years, the sales of fresh Christmas trees has decreased from 37 million to 33 million trees. The decline in sales closely reflects the increase in sales of artificial trees. It is the hope of the fresh Christmas tree industry that a research and promotion program will help create a well coordinated national campaign to increase the demand of fresh Christmas trees. The industry has tried voluntary marketing campaigns only to watch them fade when contributors feel they are carrying the weight of the entire industry.
The purpose of the government programs is to increase demand of Christmas Trees. Demand for Christmas Trees has declines because of rising demand for artificial trees. Presumably, then, increasing demand for Christmas Trees will require reducing demand for artificial trees. That’s great for the Christmas Tree industry, but not so great for the artificial tree industry.
Why is the government siding with one over the other?
This is a classic case of special interest politics, where government acts in the interest of one particlar interest at the expense of another. The targeted industry is often forced to respond by increasing lobbying and other government related activities of their own. The collective result is a drain of resources away from productive use and toward rent-seeking.
If people are increasingly abandoning real Christmas Trees for their artificial counter-parts – which don’t make a mess, require no watering, and can be reused year after year – it’s likely because consumers are increasingly judging the latter to be a superior product. The government should not take it upon itself to try and change their minds, nor assist a competing industry in doing so.
