The aim of this study is to find a solution to the rising problems posed by excessive gas pollution, which has necessitated the creation of a sound and effective climate policy. There has been a lot of studies done in this department to mitigate the adverse consequences of climate change, so this study seeks to bridge the literature gap and contribute to the establishment and application of an ambitious climate policy. According to this paper, pricing gas emissions like carbon dioxide and other greenhouse gases will lead to the betterment of the economic conditions. The findings of this paper allow policymakers to devise the most suitable policy that isn’t only effective environmentally, but also, meets fiscal, economic and distributional demands. Applying a $20 tax on carbon dioxide gas emissions will lead to an increase in revenue, and GDP. Since the tax rate rises more than inflation, so this clearly implies the stability and reliability of applying such a tax on carbon emissions.
Furthermore, it is widely known that the economic burden of increasing taxes mostly falls on the consumers of the product rather than those who cause the development of gas emitting products. To fairly distribute the tax burden, states need to set a point of taxation that increases the effect of the tax imposition, but reduces the number of taxpayers. When comparing a carbon tax with other climate policies like Clean Power Plan and other Clean Air Act, it was noted that Clean Power Plan has full-fledged flexibility in achieving their target goals. Furthermore, carbon taxes have turned out to be more effective in smaller states, thus showing that the conditions for passing new taxes are different in each state. States can employ a variety of policies to diminish the increasing rate of carbon emissions.
Moreover, (Sterner)also pointed out the pivotal role fuel taxes play in improving the environment. His results have pointed out that due to the imposition of fuel taxes, demand of fuel and its respected carbon missions have successfully declined. Along with this he also proved that the demand for fuel is elastic in nature, because price elasticity is significantly high in the long-run and vice versa (Sterner 3194). When discussing a paper highlighting the impact of gas tax on the economy of Nevada, a lot of favorable results were found. To begin with, Nevada seems to import most of its fossil fuels and imposing gas tax when these fuels are burned can help generate a lot of revenue. It further states that knowing the time for the imposition of tax, which is most commonly known as stop gap, can be long-term as well as short-term (Bartholet).
Furthermore, fast growing countries like the United States and Asia are dealing with a long-run problem, because increased technological advances are making it difficult for policymakers to accurately calculate the energy and fossil fuel intensities incurred in the future. This modernization is linked increased demand for fuels, which is in turn directly proportional to the damage done to the environment locally and internationally. Since increased climatic changes are leading to global warming, the future of our world is in grave danger. The increased use of carbon emitting fuels are making conditions worse and leading to drastic changes, which require immediate attention. Such climate policies might not show results instantly, but one can only hope that they are continued to be effectively implemented, so that usage of carbon fuels diminishes and is replaced by better, renewable resources.
When trying to implement gas taxation, sources like DSIRE and ACEE play a very valuable role in finding out the steps undertaken in implementing a carbon gas tax policy. DSIRE stands for Database of State Incentives for Renewables and Efficiency, and is a detailed source of state level projects for both renewable energy and energy efficiency programs. Along with this, they also provide information about federal incentives and programs. Moreover, ACEE stands for American Council for an Energy-Efficient Economy also serves the same purpose as DSIRE (Geography). When designing the tax on carbon emissions for the U.S., we need to keep in mind the tax rate, the optimal tax base and international trade concerns. To begin with, after an intense analysis of countries which implement a carbon tax, a system for trade with these countries as well those with imports with carbon taxes is created. According to the terms of the system, taxes could be based on the average emissions by either the importing country of the exporting one. Followed by this, official records are made between the buyer and seller of the carbon emitting fuel, which describes the attributes of the fuel. This allows the simplification of the tax system of upcoming carbon related technologies (Implementation).
The benefits of implementing a carbon tax are innumerable. Firstly, the government isn’t capable enough to efficiently target subsidies and mandates because of the unreliable information given to them about technologies, and it is hard to gain popularity when the project isn’t politically favorable. Moreover, imposing activities that are less economical than the avoided harm incurred by the environment makes carbon taxing a better choice (ADELE C. MORRIS). Along with this, polluters will be held more responsible for destroying the environment as compared to forcing the whole community to pay carbon taxes, despite them being involved in environment friendly adaptions. This way the poor are also saved from being exploited, because they can’t even afford to buy automobiles, so imposing taxes on them is quite unfair (Schweitzer 13).
Furthermore, when analyzing Nevada, taxes on gas emissions meet the projected revenue shortfall for the next biennium, or could “replace” the Modified Business Tax, thereby substituting a tax on one production input, energy from fossil fuels (which includes the appurtenant emission of carbon dioxide and other pollutants), for another production input, labor (Bartholet). Another researcher highlighted that carbon taxation allows its cost to fall at the same level as that of alternative energy resources. The revenues collected in developing various programs that will further transform the economy into a less carbon-intensive environment (Geography). Moreover, if a revenue-neutral carbon tax is capable of diminishing greenhouse gases and carbon emissions, as well as the cost of the tax system, then it proves that the conditions and design of the climatic policy are very extremely efficient and effective. Since cap and trade isn’t reliable and cost effective, so the preference of taxes on carbon emissions automatically increases (Goulder 5).
Nevertheless, lobbyists aren’t such huge fans of taxes on gas emissions, because they believe that these taxes will prove detrimental to their competitiveness. Harmonization between sectors will cause the effective price of transport to decrease, whereas the taxes on carbon increase at such a great rate that it could harm the whole economy (Sterner). Recently, a carbon tax is planned on being implemented in Washington; however, that remains unsure due to the opposition from Republican lawmakers and people who are dedicated to the studies of fossil fuels (Zaffos). Well-known societies like the Washington Environmental Council and the Sierra Club are also not in favor of this tax imposition, because they believe that such changes will not remedy the depleting climatic changes as well as fails to reestablish energy and transportation infrastructure that will aid in controlling the climatic changes (Geiling).
To conclude, despite being received so much opposition from people, carbon taxes still remain popular and prevalent in nations like Britain. It is necessary for other countries, especially the developing ones to follow in their footsteps and design environmental policies to combat the damages done by carbon emissions. A lot of measures can be taken to remedy the situation and imposition of the carbon tax seems to be one of the effective one, thus Nevada should consider applying this fiscal instrument soon.
ADELE C. MORRIS, YORAM BAUMAN, and DAVID BOOKBINDER. “STATE-LEVEL CARBON TAXES:OPTIONS AND OPPORTUNITIES FOR POLICYMAKERS.” Brookings (2016).
Bartholet, Richard. “Case for a Carbon Tax in Nevada.” (2016).
Geiling, Natasha. “Opposition to Washington’s historic carbon tax initiative is coming from the unlikeliest of sources.” 6 October 2016. Think Progress.
Geography, Departmnet of. “Energy Conservation Policies.” n.d. PennState College of Earch and Mineral Sciences.
Goulder, Lawrence H. “Climate change policy’s interactions with the tax system.” Elsevier (2013): 3-11.
“Implementation.” n.d. Carbon Tax Center: Pricing carbon efficiently and equitably.
SCHWEITZER, Lisa. “The Empirical Research on the Social Equity of Gas Taxes, Emissions Fees, and Congestion Charges.”.” (2009): 1-21.
Sterner, Thomas. “Fuel Taxes: An Important Instrument for Climate Policy.” Elsevier, Energy Policy (2007): 3194–3202.
Zaffos, Joshua. “A tax on carbon pollution faces surprising opposition.” 25 October 2016. High Country News.