Gun pollution: pricing firearm ownership in Canada

Gun control advocates argue that fewer guns will reduce crime, reasoning that criminal gun use is influenced by gun availability.  Their opponents argue that either 1) this doesn’t matter since gun ownership is a right that can’t be denied based on perceived or real social costs or 2) guns reduce crime.  The first argument is hard to analyze empirically, and does not generalize particularly well outside the small number of jurisdictions with explicit ‘gun rights’ statutes.  The second point is contestable on empirical grounds, and has been debated for decades (see Hemmenway 2014Duggan 2000; Kleck and Patterson 1993; Black and Nagin 1998; Ludwig 1998Lott and Mustard 1997), with the vast majority of research suggesting a relationship between accessibility to guns and gun-related crime. Nevertheless, gun control debates are often too polarized to generate useful policy, so there is little point in trying to advance a control agenda using a cost-benefit approach.

Here I discuss an alternative approach.  Specifically, I will treat guns as an environmental hazard, and discuss the possibility of a ‘polluter pays’ licensing fee that internalizes the social costs of firearms.  This offering should be broadly supportable since it is the standard free market approach to solving environmental problems (appealing to political conservatives) but should also increase public safety (appealing to political progressives).

Guns as an environmental hazard

Virtually every firearm in existence starts its life legally, passing from a legal manufacturer, to a legal retailer to a legal owner.  From time to time firearms are lost, stolen or sold illegally, and end up in the hands of a person who uses them to commit crimes.  Legal owners may also use the firearms in a criminal manner.  The criminal use of firearms (by legal or illegal firearm owners) are the primary social costs of firearm ownership, and they exist for all firearms; no gun owner can know with certainty that their gun will never cause harm to others, and this potential for harm (no matter how small) is a cost to society at large.

Many industrial activities work in a similar way, and pose a small (but non-zero) danger on human or ecological well-being.  Most owners of these industries mean well and do their best to minimize harm, but the potential for harm remains, and they are regulated accordingly–with emission limits, inspection requirements, operating standards, prohibitions and special insurance requirements to cover the cost of environmental catastrophe if they were to happen.  Industries that can profitably adapt to the regulations continue to do business, and those that don’t close down, but what’s important is that the social and environmental costs are often incorporated into their operational costs.

Firearms offer a private benefit (joys of shooting, perceived self-defense) as well as social costs, and so I think it is useful to think of them as negative environmental externalities. Like other environmental externalities, the private benefit eclipses the social cost, but unlike many other negative externalities, the social costs of firearm ownership are mostly unpaid.  In Canada, for example, a prospective gun owner must pay for gun education and pay for a possession license, but there is no specific tax on firearms themselves; a person could own 100 firearms or 1 firearm and the fees would be the same.

There are a number of options for reducing negative environmental externalities, but the most simple and probably least expensive in this case would be a Pigovian tax on firearms.  This tax internalizes the social costs of gun ownership directly by adding a fee to firearm purchases that covers the average social costs of firearm ownership.  Pigovian taxes are often proposed to ensure that social costs are not ignored by private individuals (or firms), but do not have a specific policy purpose.  Nevertheless, because they would make gun ownership more expensive, they probably would reduce the number of firearms sales.

gun_pollution

A Pigovian tax is typically based on some derivative of social cost.  Calculating the precise social cost of each gun purchase is impossible (we don’t know whether or not a gun will be used in a crime a priori), but it can be averaged over the population.  For example, if we focus only on murder, add up the number of gun homicides in Canada (around 150 to 200 a year) and multiply it by the value of each human life (say  6 million dollars) this gives us a total social cost between 900 million and 1.2 billion dollars a year.  From this, we can calculate an annual fee that gun owners should pay for each gun in their possession to cover the social costs of their gun ownership.  Simply divide the total costs by the number of guns (roughly 8 million in Canada).  Based on these calculations, tax should cost between $112 and $150 per firearm per year.  The cost would go up if we also included firearm injury and firearm suicide, perhaps to as much as $300 per firearm.

At present, Canadians pay considerably less for their firearm licenses.  A five year renewal of the firearm license in Canada costs between $60 and $80, (corresponding to at most $16 a year) and as noted above, applies to persons, not guns.  This gap between what is currently paid by firearm owners and the true social costs suggests, at the very least, that there should be some discussion about increasing firearm license fees. I would also argue that the fees associated with firearm training ($150, for non-restricted weapons) should be lowered if not removed, and that more training should be made available in general.  If revenue from the firearm tax were directed into better access to training, it may be possible to doubly benefit from internalizing costs–with fewer guns and more gun safety.

Conclusion

All guns start their lives legally—they are legally manufactured somewhere, and then flow from manufacturers to retailers to private citizens through the exchange of money.  The legal purchase of a firearm increases the pool of firearms available for use in criminal acts, which in the language of environmental externalities, increases public exposure to hazard. This is true whether the firearms are in the possession of legal owners or not; after all, illegal firearms are only illegal because legal owners were unable to secure them, or transferred them illegally.  Owning a gun imposes a social cost, and owners that decide to own guns for private benefit should be held responsible for their decisions.

Note: Firearm and ammunition taxes have been recently implemented in Seattle, and in Canada, the Conservative government waived the firearm licensing fee between 2006 and 2013.