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A progressive carbon tax policy to reduce both CO2 and poverty

Not taxing carbon is a bit like trying to reduce smoking without taxing cigarettes.

Raising the cost of carbon with a comprehensive carbon tax on all fossil fuels, collected at the point of production or import, uses market forces to reduce CO2 emissions in a very cost-effective and efficient way. Both energy efficiency and the use of low-CO2 energy are encouraged.

It applies to all sectors, including heating, industry, electricity generation and transport.

Fossil fuel subsidies, for example, tax breaks on the North Sea oil and gas, are a negative carbon tax and should be withdrawn.

If the money raised is paid back as a dividend to all UK residents on an equal-per-head monthly basis, then people with a below-average total carbon footprint (i.e. those for whom the dividend payments exceed the effect of price rises due to the tax) are subsidised by those with above-average footprints. Children can be rated at half the adult rate, which can be added to Child Benefit. The dividend, a form of UBI (Universal Basic Income), makes the policy progressive. Poor people’s limited total spending power means their total carbon footprint is almost always below average, even including increased home heating costs, making them winners; as will nearly all people in fuel poverty. Overall, poverty is reduced.

Posted in Op-eds | Also tagged | 6 Comments
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Recent Comments

  • Roland
    Whilst I get peoples general concerns, perhaps an alternative viewpoint might add further to the discussion. What has become clear, the various schemes to en...
  • Brad Barrows
    Interesting article and comments. Taxpayers often do not think it fair that they should be required to pay higher taxes so that some people can chose to decline...
  • Gordon
    @John Medway – My introduction to investment was in a ‘real economy’ company (not financial services/markets) where it was, in principle, straightforward ...
  • John Barrett
    Well said, John...
  • matt
    @Cassie Totally agree with what you said this seems absurd to potentially force people to work in the care sector if this was a vocation that they had no int...