Chlorofluorocarbon (CFC) Taxes at Distributor Inc.

This case study examines the impact of the federal Fluorocarbon Tax on Distributor Inc., a large independent chemical distributor in the United States. The document details how the tax on chlorofluorocarbons (CFCs), intended to protect the stratospheric ozone layer, created accounting challenges and strained customer relationships as costs were passed through the supply chain.

• The 1987 Montreal Protocol on Substances that Deplete the Ozone Layer called for a phase out of the manufacture and use of chlorofluorocarbons (CFCs) because scientific evidence linked increased atmospheric CFC levels to decreasing stratospheric ozone concentrations, which allows more ultraviolet light to reach the earth.
• In 1990, the United States implemented the federal Fluorocarbon Tax (IRC §4681) on CFC manufacture, with an initial tax on freon of $1.37/pound. This tax was paid by manufacturers and passed through to Distributor Inc. and subsequently to its customers, with legislation requiring incremental annual increases.
• Distributor Inc. faced operational difficulties because its accounting system could not separate wholesale unit costs from product taxes. This lack of transparency led some customers to suspect the company was using the tax to increase profit margins, resulting in demands for detailed breakdowns of non-tax product costs and taxes on invoices.

APA

Stinson, C. H., & Soderstrom, N. (1997). Chlorofluorocarbon (CFC) Taxes at Distributor Inc. World Resources Institute. https://pdf.wri.org/bell/case_1-56973-235-3_full_version_english.pdf

Chicago

Stinson, Christopher H., and Naomi Soderstrom. Chlorofluorocarbon (CFC) Taxes at Distributor Inc. World Resources Institute, 1997. https://pdf.wri.org/bell/case_1-56973-235-3_full_version_english.pdf.

Wikipedia

{{cite report |last1=Stinson |first1=Christopher H. |last2=Soderstrom |first2=Naomi |title=Chlorofluorocarbon (CFC) Taxes at Distributor Inc. |publisher=World Resources Institute |date=1997 |url=https://pdf.wri.org/bell/case_1-56973-235-3_full_version_english.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{stinson1997chlorofluorocarbon, author = {Stinson, Christopher H. and Soderstrom, Naomi}, title = {{Chlorofluorocarbon (CFC) Taxes at Distributor Inc.}}, institution = {World Resources Institute}, year = {1997}, url = {https://pdf.wri.org/bell/case_1-56973-235-3_full_version_english.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }