Carbon Tax, an Idealistic Concept of the 21st Century
BY SRUSHTI PUNGHERA / SEPTEMBER 24, 2022
Taxations are generally the one-stop solution to limiting any potentially harmful threat. With ever increasing production due to globalization and expansion, can taxation hamper global production? Or shall it give rise to cleaner and healthier alternatives?
he shifting climatic conditions prove that climate change is a significant issue, unlikely to be resolved anytime soon. Extreme rains, wildfires, and frequent droughts are all effects of climate change. The observed changes in our global climate are something modern humans have never seen before. One significant contributor to climate change is carbon emissions. Thus, implementing a carbon tax seems to be one simple way to bring about a positive change.
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To begin with, a carbon tax should contribute to a decrease in emissions, first, by pressuring businesses and manufacturers to reduce output to a reasonable level, and second, by utilizing the revenue made to put cleaner, more environmentally friendly energy sources into use. While these methods appear clear and straightforward in principle and in an idealistic world, various other objections also surface.
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Illustration by Sèbastien Thibault on Behance
Consider a situation where the government levies a high tax on carbon emissions. The first reaction to this would be an increase in petrol prices. Resulting in a quick rise in everything's price! Transportation, production, and living expenses all increase right away. Alternatives are considered second best for a reason: their high cost, which most working-class families find difficult to bear. Most of the population's savings dip by paying taxes or opting for alternates. A world where 40% of the population earns mouth-to-hand will move towards a higher poverty level.
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Further, another supposed change would be the transition of regular cars to electric cars in the far-off future, provided that the population accepts the blow and agrees to invest in cleaner energies. The existing supply of electric vehicles will not be enough. Thus, massive manufacturing begins but with carbon taxes this time, suggesting substantially higher costs.
With such a heavy emphasis on electricity, one might forget how the same is generated– by burning fossil fuel, bringing this entire scenario to square one, with added poverty, of course.
The scenario mentioned above is one of many possibilities that could play out, indicating that enforcing carbon tax is not as simple as it looks, certainly not in the same manner for corporate giants and the regular working class. In light of the former, it may be claimed that the carbon tax is typically regressive, meaning that the tax rate drops as the amount subject to taxation grows.
In a sense, carbon taxes ensure that businesses and consumers are held accountable for the social and environmental costs they cause and make up for market failure.
In a sense, carbon taxes ensure that businesses and consumers are held accountable for the social and environmental costs they cause and make up for market failure. A market failure occurs when there is a loss of welfare, which in our instance, causes a rise in pollution levels as a negative externality. Carbon prices should, in theory, both help pay for repairing environmental harm and serve as a deterrent against excessive fossil fuel use. However, no matter how much money is made in revenue, once carbon is released into the environment, there is simply no way to retrieve it. Additionally, this encourages the idea that one may utilize the environment at their disposal by paying the appropriate sum of money in the form of a carbon tax.
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Despite being a superpower nation, the USA alone is responsible for 25% of the world's carbon emissions, or 400 billion tonnes, and it actually cannot repair this.
Despite being a superpower nation, the USA alone is responsible for 25% of the world's carbon emissions, or 400 billion tonnes, and it actually cannot repair this. Not every nation implements this policy, but while carbon prices may disincentivize and cut emissions, global carbon emissions will still occur. The bottom line is that one nation's pollution will ultimately affect the global picture. The most straightforward response to the question of why we shouldn’t start severely taxing the companies that produce the most carbon dioxide is that first, taxes compare nothing to the profits those industries make, and second, the same tax will be reflected in the price consumers pay, causing prices to increase and ultimately harming consumers the most because businesses can readily recover the lost revenue.
Illustration by John Holcroft on Behance.
Not every nation implements this policy, but while carbon prices may disincentivize and cut emissions, global carbon emissions will still occur.
This raises better options, including ending government subsidies for coal, oil, and gas companies. Certain subsidies are poorly targeted, disproportionately helping the more affluent class rather than the class they were meant for, and even while the wealthy will lament some price increases, they will continue to spend nevertheless. Because subsidies do not reach the actual beneficiaries, they may already be searching for alternatives. Therefore, the same funds can be allocated to hydropower, solar, and wind power. Similar to this, the use of public transportation may be encouraged and promoted by offering redeemable travel credits and developing new, regular routes to prevent congestion and inefficiency. This ought to assist in reducing the carbon emissions from personal automobiles.
Emissions are inevitable, and levying taxes will reduce them only by a small percentage. A vast breakthrough is needed toward cleaner energies. Regulating emissions, subsidizing alternatives, and a shift in infrastructure style can help battle climate change more efficiently. In conclusion, a carbon price is an idea that will succeed in a utopian world. A society without poverty, overpopulation, and well-paying employment. A society in which individuals would be truthful about their earnings and refrain from using unethical tactics to heat taxes, a society
where there is genuine compassion towards the environment. Repetition of the idea that a healthy environment is the greatest one conceivable can serve to remind individuals to become more conscious of it. One can make the best contribution by being aware of their carbon footprint and choosing more environmentally friendly options.
Keywords
Carbon, carbon emission, carbon taxation, climate change, environment, energy source, social cost, environment friendly, utopian world, clean energy
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References
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Sources:
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Amadeo, K. (2022, March 13). How a Carbon Tax Can Solve Climate Change. The Balance; www.thebalance.com. https://www.thebalance.com/carbon-tax-definition-how-it-works-4158043#toc-disadvantages0
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Wihbey, J., & John Wihbey, M. by. (2016, July 20). Pros and cons of a carbon tax » Yale Climate Connections. Yale Climate Connections; yaleclimateconnections.org. https://yaleclimateconnections.org/2016/07/pros-and-cons-of-a-carbon-tax-key-issues
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The Truth About Carbon Taxes. (2022, January 23). YouTube; www.youtube.com. https://www.youtube.com/watch?v=aznOL753eiQ&t=298s&ab_channel=RealEngineering
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