Carbon Tax Free Essay Example, 2000 words

The examination of the effectiveness of the carbon tax system can be done by considering the benefits and effectiveness of this taxation policy in solving the environmental impacts of the use of different energy resources in industries, household and different industrial sectors. A significant question in this aspect is that how fast and to what degree the carbon taxes will be able to control the carbon dioxide emission levels. Also, the administration of the carbon taxes in the real world scenario is likely to be faced by a number of challenges and restraints. These include the political distortions present in different nations, the difference between the usage of energy fuels in developed and developing countries and the level of social and environmental responsibility that each of the countries are interested to display. The pricing of carbon can disproportionately impact different sections of an economy. While the carbon taxation imposed on the economic sectors are likely to con trol the prices of the carbon fuels, the carbon taxation without revenue returns may also impact the lower income households spending to a huge extent. We will write a custom essay sample on Carbon Tax or any topic specifically for you Only $17.96 $11.86/pageorder now If the government of any country wants to prevent these impacts of carbon pricing of the middle and low income groups of households, then they would have to intrigue the tax shifting policies which may burden the economy in the long term. In case, the uniform carbon tax rates are imposed on different industries, then there may be scopes created for the non carbon taxing nations to gain unfair advantages in the trade practices and revenue generation which may affect the global economy by misbalancing the trade advantages available to each of the countries. Therefore, the border tax adjustments would remain a major concern for all the governments that are planning to levy the carbon taxes on the emitters functioning in various economic segments. Solutions The carbon taxes are likely to work as a cost effective measure for controlling and reducing the levels of greenhouse gas emissions. This tax, being a Pigovian tax would help to address the issues related to the emitters of the greenhouse gases not showing adequate environmental responsibilities and paying the social costs for their activities and operations. The regressive effects of the carbon taxes that are likely to affect the low and middle income groups in a disproportionate manner can be solved by using proper fossil fuel subsidies that would help to control the level of expenditure on fossil fuels as done by these groups of people.