2 thoughts on “Debate: The pros and cons of carbon taxes”

  1. Posted 12/11/2018 at 09:15 | Permalink

    A carbon tax set initially at a modest level and incrementally increased as experience of its effects become clearer is the way to go. But don’t underestimate the difficulties of implementation. The ‘carbon content’ of all products and services (including imports) would need to be estimated. In a similar way to VAT, carbon-added could be assessed and taxed but this is not an easy or simple job.

  2. Posted 14/11/2018 at 20:27 | Permalink

    Regarding who gets the compensation, a fee is being charged for the right to pollute a common resource. As such, that fee should be equally divided among society. If costs are being internalised, there is no need to pick out one group as recipients for that compensation.

    Jamie Whyte isn’t playing by the rules of fair debate. In the main, he is not arguing about the pro/cons of the mechanism of the Carbon Tax, but whether or not it is necessary. He says economists don’t know the net cost, but surely doesn’t mean they couldn’t give it a try? Indeed, lots of them have and published a large body of work on the matter.

    The most substantive point he makes is one of carbon leakage. However, it has to be put into the context that all governments need to raise taxes, and most do so from damaging taxes on output. So the worse that could happen it appears to me is a straight swap.

    As it happens, most countries, like China want to reduce fossil fuel consumption for many reasons, not just global warming. I really don’t think getting a competitive advantage from carbon leakage is a policy goal. Why else are they looking at carbon taxes/cap and trade themselves?

    Easy win for Prof Booth.

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