2023-07-12 02:27:02
A new analysis warns that the proposals for the application of carbon taxes They tend to apply to all emissions equally even though they are not all made for the same reason: they range from more essential purposes, such as heating the house, to non-essential “luxury” activities, such as leisure travel. This can give rise to inequalities and aggravate them, warn the researchers in the journal One Earth (1).
Instead, the paper suggests taxing luxury carbon emissions at a higher rate, since if the 88 countries analyzed in this study were to adopt the luxury-focused policy, they would achieve 75% of the emission reductions needed to achieve the Paris Agreement goal of limiting climate change to well below 2°C by 2050.
“There is an injustice in terms of who uses energy, or carbon, for basic or luxury purposes, but it has yet to be translated into explicit policy,” said Yannick Oswald, an economist at the University of Leeds in the UK. – In this study, we tested for the first time policies derived from this insight.”
The same price for all issues
Several countries, such as Canada and Mexico, have active carbon pricing policies, which either price all emissions the same or focus on one type of emission, such as heating or fuel.
However, previous research has shown that, in high-income countries, these policies tend to hit low-income households the most and do not have a large impact on emissions. This could be because resources such as heating or fuel they account for a larger share of low-income household spending and are hard to do without.
To test the impact of a tax program that distinguished between the carbon emissions of basic and luxury activities, the researchers built a model based on the carbon footprints of households from 88 different countries.
To test the impact of a tax program that distinguished between the carbon emissions of basic and luxury activities, the researchers built a model based on the carbon footprints of households from 88 different countries.
Tax rate for different types of purchases
For each country, they designed a tax rate for different types of purchases, ensuring that activities that account for a higher share of low-income spending would be taxed less relative to activities that account for a higher share of high-income spending. In the United States, for example, vacation travel would be taxed at a higher rate than heating.
They used this model to test the outcome of their luxury carbon tax rates or a flat carbon tax rate. With a flat tax rate, 37% of global carbon tax revenue would come from luxury purchases. This figure rises to 52% with a luxury-focused tax program.
The luxury tax was not only “fairer” in terms of household income—it affected low-income households less and high-income households more—but it was also slightly better at reducing taxes. annual household emissions in the very short term. The researchers note that this could be because luxury purchases are more likely to be foregone than an essential purchase if the price increases.
Although the luxury tax was fairer in all the countries studied, the researchers found that in low-income countries, a flat tax could also be fair.
Luxury-focused carbon taxation also targets high-income groups, who may be the most prepared to lobby against such a policy coming into force.
In South Africa, for example, low-income households already spend much less on fuel or heating than high-income households. Therefore, a flat carbon tax already targets high-income groups by design.
Instead, the luxury carbon tax it is more beneficial in terms of equity when applied to high-income countries. This tax may take more into account flexible and non-essential purchases in countries like the United States, where it is difficult to avoid carbon-emitting activities, such as driving a car, in a low-income lifestyle.
Although this type of policy could go a long way towards reducing global emissions, the researchers also point out that this goal could be difficult to achieve in practice. Few countries currently have such a stringent carbon tax regime.
Luxury-focused carbon taxation also targets high-income groups, who may be the most prepared to lobby against such a policy coming into force.
World public opinion is strongly in favor of fair climate policies
“World public opinion is very much in favor of fair climate policies, and luxury carbon taxes are likely to be just as popular Oswald says. Despite the limitations of the model, the big takeaway is this: when designing climate policies, it is possible to pay attention to the different nature of consumption purposes, and this would improve the equity of climate policy almost by default.” .
References (1) Luxury-focused carbon taxation improves fairness of climate policy. One Earth.
#Carbon #taxes #focused #luxury #consumption