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  • Published: Dec 23rd, 2010
  • Category: India
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A case for carbon tax


| Sourced From TheHindu |

Nigel Lawson believes that a case can be made for the introduction of an across-the-board carbon tax, initially at a relatively low level, provided that the proceeds of the tax are fully returned to the pockets of the people by a reduction in other taxes such as income tax.

If the objective is seriously to reduce global emissions, it would need to be a consumer-based tax, since in the globalised world economy industry is highly mobile, whereas individuals are far less so, he elaborates, in An Appeal to Reason (www.harpercollins.co.in).

Plucking the goose

The case for a carbon tax, says Lawson, is essentially twofold. First, the art of taxation is to pluck the goose so as to obtain the largest amount of feathers, with the smallest possible amount of hissing.

Harking back to this insight of Colbert, the great seventeenth century reformer of the French tax system, the author confesses to having used this as the basis for high-sounding health arguments to justify raising substantial revenues from tobacco taxation, always taking care not to pitch the duty so high that too many people gave up smoking, causing the tax actually to diminish. In the same way, if people like to feel that they are helping to save the planet by paying a carbon tax, they should not be deprived of the opportunity to do so, argues Lawson.

The only practical way

Secondly, levying a carbon tax is the only practical way of getting an indication of what it might take to change behaviour sufficiently seriously to cut back on carbon-based energy consumption, the author notes. He avers that even if the damage done by increased atmospheric concentrations of carbon dioxide is no greater than the economic and indeed human cost of forced decarbonisation, if the spirit of the age demands that something be done, if only as a gesture, to curb CO2 emissions, then a carbon tax imposed on a strictly revenue-neutral basis would do no great harm.

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