Wanted: a fair carbon tax

The principles of corporate change management emphasize that, although the transition must begin at the top, real change must come from the bottom. It’s a lesson that French President Emmanuel Macron probably wishes he remembered as protesters rioted in the streets of Paris over the past few weeks against a planned new green tax, making fuel more expensive.

The movement has some support from economists, who see the widespread introduction of such green taxes as regressive: the poorer people are, the higher the proportion of their income they spend on basic things like fuel, and therefore they A burden arises when those goods are taxed. So French ‘yellow vest’ protesters have complained – with some justification – that the new fuel tax places unreasonable demands on those who can least afford it.

The events in France highlight the need for an ‘equitable transition’ that environmentalists and researchers have long been insisting: smart climate policies must be fair, addressing both opportunities and inequalities.

In the long term, the benefits to humanity of a social shift away from fossil fuels and toward cleaner sources of energy will far outweigh the costs. But the transition could have serious implications for some regions, regions and countries. Poor management can result in loss of income, opportunity and future prospects for some workers and communities. So – and this is being discussed at the UN climate talks in Poland this week – how can it be managed well?

Investment in renewable energy is making great strides and the cost of wind and solar energy is falling rapidly. But it is inevitable that in many applications the cost of fossil fuels will have to increase to force the pace of the transition to a clean economy. The surest way to do this is with some kind of carbon tax. (Global politics has strongly moved away from the other major route, a cap-and-trade system.) And one way to make a carbon tax more attractive to taxpayers is to give them money back.

This is essentially Canada’s plan. Starting next year, Prime Minister Justin Trudeau’s government will introduce a national ‘fees and dividends’ scheme that would impose a levy on the carbon emissions of fuels and other products, but then return the money to individuals and companies through tax exemptions.

Most residents and businesses in Ontario, Saskatchewan, Manitoba and New Brunswick — four provinces subject to the federal tax (other states have introduced their own versions) — will receive refunds the government says will exceed the carbon tax. average family.

According to government estimates, about 70% of people will get more back in dividends than they paid in the new tax. Only those who use a lot of fuel will end up out of pocket. It is a bold move and will help determine whether Trudeau will remain in office after the general election in October.

The introduction of the French tax has now been suspended for six months, to give the authorities more time to consider their response. Elsewhere governments and policy makers will be watching with interest. So will environmentalists and economists. If the question for the twentieth century was about the role of people in climate change, the problem now lies in finding a politically acceptable way to persuade or force people to take the necessary action to reduce emissions.

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