‘Taxes’. It’s a word that tends to strike fear and hatred in many peoples hearts and minds, instilling thoughts of slashed income earnings, costly purchases and the downfall of many a society. When we see it plastered over the news headlines and atop papers, we instantly think that once again, our governments are stepping up their efforts to screw us over financially by taking our rightfully earned money and wasting it away on projet that us as the taxpayers never see the light of.
Tax however is something us in the developed economic world have to deal with, it’s a power we cannot afford to ignore (excuse the pun). Without income tax and VAT, our nations would be without the cash to make our lives as good as they are, and they are good, even if economic downturn and suffering seem so rife at the moment. It’s never so much the idea of the tax itself that angers us, but the level we have to deal with, and its no surprise that us Westerner experience some of the highest in the world. Then again, we also experience the best living standards globally, so it can’t be all that bad can it?
This is why it’s high time the developed world took a long hard look in the mirror (and wallet) and began seriously considering what has become known as the ‘carbon tax’. The concept has been around for decades, and has only grown in potential since its inception. Unfortunately, it has yet to latch firmly onto daily life, always sitting in the background as a mere point for consideration than an actual solution. This stance is well overdue in its updating, and now more than ever, the carbon tax could be the answer to so many of our problems.
In effect, a carbon tax places a price, usually called the ‘social cost of carbon’, on a single ton of CO2, taking into account estimated disadvantages to health, population, the economy and the environment, with a round figure calculated at the end. Once this value has been obtained, the government will then charge any polluter, small or large, for each ton of carbon emitted into the atmosphere, an element we know all too well as a highly damaging pollutant.
This encourages polluters to do many wonderful things, ranging from innovating greener technology, to reducing dirty practices, switching fuel and ultimately curbing climate change. At the same time, a massive stream of revenue is provided to the government which can be directly reinvested back into renewables and cleaner industries. I’ll get to the side-benefits later, but for now, that’s enough to know that carbon taxing has the potential to actually make a solid difference, both to the planet and our wallets.
Currently, the cost of carbon in Europe, under the EU ETS scheme, is roughly $7, but prices vary wildly all over the globe, from as low as $1/ton up to $50-60/ton, but rarely has the price made much of a difference; it tends to act more as an aspirational figure than a true policy foundation. This is the reason many likely haven’t heard of many positive outcomes - there haven’t really been any. Although the idea has so much potential and countless articles singing it’s many praises, it has all but been ignored in the grander scheme of feed-in-tariffs and natural gas booms.
Some places however are challenging this poor pricing structure, such as British Columbia, a poster-boy paving the way towards a world with carbon taxes. They raised the carbon cost up to $30 recently, encouraging a multitude of emission reductions, innovations and clean-up acts. In fact, this is exactly what the world needs - hard, real evidence that a carbon tax is in place and working in precisely the fashion it was designed to.
Using them as a case study, we see that slapping a tax on the dirty part of the economy not only creates an initially massive source of cash for the government, but allows for other taxes to be reduced using the money pool, such as income, which dropped from 12% to 10% in BC alone, and can also create jobs in the rapidly growing green sector as innovation into clean technology is nurtured. Not only this, but a carbon tax is extremely simple to implement, can be applied practically worldwide without much structural or governmental barriers, and is guaranteed to reduce global emissions as long as the price is high enough.
As always, there are some negatives to the plan. Carbon leakage, whereby polluters simply move to a nation where taxing is weaker or non-existant, can easily occur, but stringent rules and widescale adoption can tackle this efficiently. Also, its not hard to imagine the revenue stream generated slowly decreasing as time passes and emissions are reduced, meaning that at some point other taxes will likely rise to compensate.
Of course, at the same time pollution is drastically reduced and host nations will be reaping the rewards of clean energy, a much lessened dependence on imported fossil fuels and overall lower costs associated with dirty industries, so the idea of ignoring carbon taxes on the basis of possible lower revenue over time is just blissfully ignorant.
In short, placing a carbon tax at the very foundation of our economic structures will promote so many good things and dispel so many more bad things, I just cannot see how it has taken this long to be given so much attention. When you have something that can reduce taxes to the consumer, green the economy, clean up or planet AND get rid of the big polluters whilst keeping them in the renewable game, to pass it up would be tantamount to surrendering.
For a better roundup (and much shorter) of the benefits, check the link below (2nd down) via solarfeeds.