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Carbon Tax

Carbon Tax

Relevance

  • GS 3|| Environment || Climate Change || Mitigation Efforts

Why in News?

  • A discussion based on Carbon Taxation and economy is in the air. One of the Canada’s minister as talked about the recession linked with the carbon taxation.

Facets of Carbon Tax

  • Stefano Carattini who is an Assistant Professor at Georgia State University, asserts that Lack of public support is often the main obstacle to introducing carbon taxes.
  • Policy makers need to carefully design and communicate the taxes in a way that will generate sufficient support.
  • A worldwide carbon tax would not disrupt the global economy, according to Anton Orlov, Senior Researcher at CICERO.
  • The economic simulations showed that the economic impact would be modest in countries with a clean energy supply, but greater in countries that rely on fossil fuels, especially coal.
  • This is true even without taking into account the large benefits from avoided climate damages 

Harmonizing Carbon Taxes

  • Imposing a cost on carbon is the most economically efficient way to reduce greenhouse gas emissions.
  • A worldwide carbon-pricing system would speed up emissions cuts, but still, this is not happening.
  • Public support for carbon taxes needs more study, especially in developing countries.
  • It is important to understand and communicate information to voters about carbon taxes and their economic, social and environmental effects.
  • Policy makers should identify the best compromises between efficiency and acceptability. 

Additional Info:

  • Carbon Tax:
  • Tax levied on the carbon content of fuels. It is a form of carbon pricing.
  • Since greenhouse gas emissions caused by the combustion of fossil fuels are closely related to the carbon content of the respective fuels, a tax on these emissions can be levied by taxing the carbon content of fossil fuels at any point in the product cycle of the fuel.
  • Carbon tax offers social and economic benefits. It is a tax that increases revenue without significantly altering the economy while simultaneously promoting objectives of climate change policy.
  • Finland is the first nation in 1990s to implement Carbon Tax. In Asia, Taiwan is the first nation to implement the Carbon Taxation. 

Mains

  • Global Carbon Tax as part of tax policy of the country that will help to arrest and reverse climate change. Discuss.