Environmental,
economical and social welfare benefits
We propose a policy that balances the environmental effectiveness
and economical efficiency. The carbon tax program we proposed
would give concerns to low-income population, people living
in cold regions and regions lacking public transportation.
Tax
rates
In setting the tax rate, we put emphasis on price incentives,
and make sure that the tax is phased in so that the companies
and consumers, not excessively burdened, will have time to
adjust.
Revenue-neutral
Under the current financial crisis, it’s not easy to increase
taxes. However, a revenue-neutral tax, taxing “bads” like
energy and resource use and not such “goods” as human labor,
gives tax breaks to companies and individuals who make efforts
to reduce CO2 emissions, while increasing economical burdens
of those that don’t. A revenue-neutral carbon tax doesn’t
create extra tax burden in the society. The introduction of
carbon tax could also reduce other taxes and social insurance
premiums.
Use
of tax revenues
Tax revenues generated by carbon tax can be used as retirement
annuity fund, to reduce other taxes such as labor taxes, and
to fund more climate change initiatives.
Concerns
for Industries
Since the carbon tax would be revenue-neutral, most of the
tax revenues will be returned to companies (in the form of
reduced income taxes, for example). Besides, companies that
face more competition in the global market and energy-intensive
industries will be taxed less at the beginning to allow time
for adaptation.
Mixed
Policies
We advocate a comprehensive approach to fiscal reforms that
integrate changes in the existing energy taxes, fiscal and
environmental policies and policymaking process. |