Carbon Taxes
more jobs, less pollution
A steady price signal
A Carbon Tax provides a steady price signal that encourages investment in renewables and efficiency.
We propose each region impose an initial $US 30 / tonne CO2.
(Carbon Trading schemes have generated highly variable price signals that undermine investor confidence so are not recommended. They also require and allocation of permits to each region which can't be done in a way that is equitable and effective.)
Creating jobs while reducing pollution
All the revenue from the Carbon Taxes should be used to reduce payroll and income taxes in the region that collects the Carbon Tax.
This will lead to a net increase in employment and the cost of employing labour decreases and investment in renewables and energy efficiency increases.
No differentiation
We note that electricity prices and fuel oil prices are not related to national GDP. For this reason we propose there be a standard acceptable rate of carbon taxation rather than a variable rate based on whether the region is 'developed' or 'developing'.
Additionally since all revenue from the carbon tax is to be used within the region to reduce other taxes no harm is done by having a flat rate.
Equivalent measures
Some sub-national governments cannot levy a Carbon Tax because of constitutional constraints. (This is true with state governments in Australia for example.)
As an alternative these governments could use:
- Enhanced fossil fuel royalties.
- Enhanced Feed in Tariffs for all renewable energy.
- Electricity and gas charges should all be based entirely on usage. All flat connection fees should be abolished so that the less you use the less you pay.
- Escalating renewable energy quotas.
- Land Taxes on fossil fuel infrastructure.
Taken together these mimic the effect of a carbon tax and all the revenue can still be used to offset payroll and income taxes.
Case study: Australia's carbon tax experiment
Australia introduced a small carbon tax on 1st July 2012 on the power generation industry. This tax was offset for consumers by income tax cuts.
Introduction
The carbon tax proved highly effective in reducing emissions from that sector by 17 million tonnes despite only operating for two years and being set at a low-level.
At the same time there was negligible effect on the economy and prices:
- Carbon tax inflation fears evaporate
- Figures show inflation effect of carbon tax mostly hot air
- Inflation slows even with carbon tax effect
- Our wealth has only grown since the carbon tax
- Carbon Tax Isn't Killing Jobs
Abolition
When the Carbon Tax was removed the income tax cuts were left in-place. Despite this there has been minimal consumer benefit in abolishing the tax. In fact Australia has started to slide towards recession and now has a deficit approaching $56 billion and unemployment has increased.
- Joe Hockey's interest rate statement gives lie to Coalition's carbon tax claims
- Carbon tax cut making a smaller impact
- Our wealth has only grown since the carbon tax
A carbon tax would encourage up-take of solar and other renewables.
Compliance
Some measures are proposed to encourage all regions into taking some action.
The below penalties could apply to regions where the national or sub-national government have not adopted any of the agreed measures.
- Limited air travel. A reduction on commercial flights to the region.
- Limited IP. Reduced intellectual property rights for companies operating in the region.
- Limited trade. Reduced trade or commerce with the region.
Note again that sub-national governments can protect their jurisdiction from compliance actions by adopting some of the standard measures.
(Top image: Wikipedia, Lower image: Energy Matters)