Monday, March 3, 2008

Benefits of a carbon tax

Enough talk about carbon-trading schemes, campaigns to eliminate plastic shopping bags, movements to ban incandescent light bulbs. Attempts to micro-manage peoples' behavior are not going to solve our most perilous environmental woes.

Anyone serious about correcting our wasteful ways favors taxing them. It worked for cigarettes, and it will work for reducing carbon emissions.

A Canadian province, British Columbia, recently instituted the world's first carbon tax: "The carbon tax will apply to virtually all fossil fuels, including gasoline, diesel, natural gas, coal, propane, and home heating fuel." B.C.'s tax plan is far from ideal. The province exempts agricultural production from the tax, and has innovated a ridiculous "coupon bonus system" to encourage people to convert their vehicles to bio-diesel. New studies show biodiesel is actually worse for the environment than the fossil fuel it replaces. At a blog, Jurgen Hissen argues against government targeted incentives like coupons and highlights the advantage of a carbon tax:

Coupons to convert the car to biodiesel might be great for some people (certainly the biodiesel industry). But if an individual’s circumstances would allow him to save more fuel by telecommunting or by ride-sharing with their spouse than by converting their car to biodiesel, why should the government tell them the only thing that qualifies as “green” is to convert your car to biodiesel? This is textbook inefficient central planning. Let the individual decide how best to avoid paying the carbon tax.

. . . There ARE alternatives to the single- occupant -vehicle commute -daily- from- the- burbs lifestyle. I carpool and take the bus home. In the summer, I ride my bike. I bought a smaller house closer to work.

I had an amusing exchange with a prominent politician in Canada where they claimed that carbon taxes were bad because they were not the most effective way of improving vehicle fuel efficiency. The reason: because instead of driving consumers to get more efficient vehicles, carbon taxes might instead just drive consumers to find other ways of getting around. And this was a “problem”.

To me the lesson is clear: personal freedom can and should be good for the environment. All people lack today are the right incentives. What governments ought to do is tax wasteful things; this goes for many activities demonstrated to be socially or environmentally destructive. Then let the people choose for themselves. And carbon taxes should be worldwide -- part of any future WTO scheme -- so as to discourage governments such as British Columbia's -- from exempting particular industries from the carbon tax.
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- Carbon tax centre website.
- Al Gore, Presidential candidate Ralph Nader, and New York Mayer Blooomberg are prominent supporters of a carbon tax. More supporters listed here.

4 comments:

  1. "What governments ought to do is tax wasteful things?"

    No thanks, I don't need Big Brother judging whether what I do is wasteful or not. If an idea is good, it should be able to stand on its own merits - it should not need the compulsory power of government to make it worthwhile.

    If you're worried about inefficient waste, the last thing you should want is more government.

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  2. Fortunately, waste -- carbon emissions -- can be measured by scientists, so the government doesn't have to "decide" anything. That's the beauty of a carbon tax.

    With a carbon tax, citizens are free to pollute or not, but if they choose to pollute, it is they, not their non-polluting fellow citizens who pay for it. That's only fair -- fair without the government taking away anyone's freedom of choice.

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  3. "With a carbon tax, citizens are free to pollute or not, but if they choose to pollute, it is they, not their non-polluting fellow citizens who pay for it."

    Not so. Non-polluters will pay too - by breathing polluted air, paying for added costs in goods and services, etc.

    Just putting a price on pollution won't stop the mess. There will always be plenty of people willing to pay a bit extra to keep polluting.

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  4. Nicholas: Just putting a price on pollution won't stop the mess. There will always be plenty of people willing to pay a bit extra to keep polluting.

    Because a carbon tax makes polluting expensive, we can expect less expensive, non-polluting alternatives to become not merely less expensive, but superior in quality also. Those who pollute a will be special cases (for example, owners of rare vintage cars).

    Besides, any people who pollute will still have to obey the laws. It's not like a carbon tax replaces existing laws about polluting. Some of these laws ought to be strengthened, but others laws on the books may prove unnecessary with a tax.

    A carbon tax is a more efficient way to reduce pollution than laws which can be expensive to enforce.

    A carbon tax will make money available to society to invest in the development of non-polluting technologies instead of law enforcement --policemen, courts, lawyers, and prison guards. That's the advantage of taxing waste. A similar argument could be made for controlling illegal drugs. We already know taxes reduce smoking! And we know tough laws have failed to eliminate drug abuse.

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