> Alberta, Ontario, Manitoba, Saskatchewan, Yukon and Nunavat use the federal carbon tax system, the Federal Fuel Charge, which started in 2019. Of these, all but Nunavat have a carbon fee and dividend scheme in place that redistributes tax revenue to the public. [0]
Since carbon use is skewed heavily to those that use the most, this means that the median user of carbon is actually given a tax credit each year.
[0]: https://en.wikipedia.org/wiki/Carbon_fee_and_dividend#Implem...
Every point along the supply chain absorbs the price signal and will find cheaper (ie less CO2-producing) options where possible, raising the price a little. Where not possible the price goes up by the full CO2 tax amount. (In other words if it’s still the cheapest option to just pay the extra tax, like jet fuel, then the price just goes up.)
The consumer might hypothetically not get any different choices, but still see a CO2 tax cause all deliveries to use electric trucks, for example.
Consumers “putting pressure on companies” is a terrible way to fix this problem because few consumers have a clear picture of the current landscape of CO2 intensity and possible best fixes across the whole economy. But if you just price the externality in, then the market constraint-solves the problem for you.
(To be clear I don’t think markets are perfect, they are just much better than human coordinators at solving this class of problem.)
Why should a random citizen get paid more just because in their country there's heavily polluting industries? It makes no sense.
Because everyone - including that random citizen - experiences harm from said heavy pollution. That's my air being contaminated, my water being poisoned, my planet being wrecked; by what rationale would I somehow not be justified in demanding compensation for that harm?
I'm not following. Random citizen also pays more in tax.
In other words, the tax you pay varies with your carbon emissions, while the dividend is constant (or rather, depends only on the total emissions of everyone). You still have a very strong incentive to reduce emissions, as it would reduce your living costs substatially but reduce your dividend by only a fraction of a penny (I.e. the change in total tax collected divided by the population).
But also consider: in the long term, higher gas prices due to supply shortages encourage companies to drill for and produce more oil -- because they are getting the profits. But higher gas prices due to a carbon tax have the opposite effect -- the buyer is paying more, but that's because the producer is paying the tax, and passing on some or most of that cost to the buyer. They aren't making more profit, but less -- reducing their incentive to pull more oil out of the ground. So that's something powerful that a carbon tax does that inflation doesn't.
And inflation is (ideally) a temporary thing, and variable. A carbon tax is intended to be permanent (and ideally, slowly and steadily increasing), something predictable and inevitable that people can plan around. You'll act differently if you think gas is going to go back down by 20% than if you think it's going to stay at the higher prices forever, or keep getting more and more expensive over time.
My understanding is that even the possibility of a future carbon tax has caused some companies to start reducing their fossil fuel dependency, because if a tax happens, they'll be in a better place than if they did business as usual.
It probably helped a little, temporarily, but it probably helped a lot less than a carbon tax.
Imagine if anything that runs on electricity was immune to the inflation. That's closer to what you'd get, though still very different in other ways.
That means that if things you buy use cause an average amount of carbon emissions you break even. The price increases you see due to the tax are balanced out by your share of the revenue.
If your things are responsible for a less than average amount of emissions, you come out ahead. If your things are responsible for an above average amount, you pay more net.
I'd like to see most forms of pollution handled this way--take the vast majority of pollution laws and throw them in the dumpster. Instead, make a list of pollutants and set a tax per ton (or other suitable unit) for emitting them. This tax is assessed at the point of creation (mining is considered a form of creation) and is rebated upon verified destruction (in many cases you'll "destroy" A to make B--you pay the tax on B but get back the tax on A) or long term sequestration. (Thus you can do things like grow trees and chuck the wood in an old salt mine and recoup the carbon tax even though you never emitted carbon.)
There ceases to be any issue of what is feasible and no issue of company A emitting a lot more than B because what B does is easier to control emissions. You don't get situations like what happened to my former employer--kept being hounded by the EPA because their record on reducing emissions had been so good and then they stopped. Duh, they stopped because they had done everything viable at that point--effectively we had the EPA on our case for doing too good a job!
That are two problems with that as opposed to just returning the carbon tax money to the general population with each person getting an equal share.
First, which other taxes would you reduce? In the US I'm almost certain that the list of taxes that Democrats would want to reduce would be different from the list of taxes that Republican would want to reduce.
Second, even if we can get agreement on which tax to reduce, the benefits to the individual taxpayers aren't likely to be proportional to, or even correlate well with, with how well they are personally doing on emissions.
For example, suppose it is done as an income tax reduction. People who don't make enough money to own income tax would not benefit, but they would have their costs of living go up from the increases in fuel and energy costs due to the carbon tax. They are in effect being taxed to subsidize the carbon emissions of wealthier people.
I don't see how a negative income tax is any different from a direct payout, you're just playing with terminology. Alternatively, if what you described is not a negative income tax then what you just did is a tax cut for people with high incomes which is anti progressive. People who pay little or no income taxes wouldn't get anything.
Giving to everyone equally would invest a very large number of voters in continuing and expanding the program.
Devoting 10% to carbon emissions reduction tech would fund a never-before-seen flowering of development.
Eliminating subsidies for carbon miners would be helpful.
I'd rather drag the 0% bracket into the negative than make it wider.
Can set it up so the average person is unaffected. The eco conscious consumer ends up richer. And the over consumers end up poorer.
Where would this money go? Who would allocate it? Would it be allocated effectively, efficiently? As effective as road tax dollars, or as effective as lottery tax dollars? Would it just go to make more factories for Tesla? More eco-warehouses for Amazon? For the bureaucrat-in-charge's cousins? Where does it go and how does it get there?