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2013 – Year of the Carbon Tax?

16 January 2013
ITC News

Is 2013 the year when environmental taxes will be mainstreamed?

Despite political opposition, carbon taxes were introduced in 2012 in Australia and Japan. Ireland has a carbon tax and a scheme to tax household waste. In the Canton of Vaud in Switzerland, residents are required to buy special bags to put their rubbish in.  Proponents of these schemes argue that the fiscal measures are having an impact. In Vaud, whilst the “bag tax” (really a tax on rubbish) is susceptible to fraud (with people selling cheaper “non-official” bags under the counter), the scheme has resulted in increased recycling rates.

In Ireland, local government requires its citizens to weigh its rubbish at the kerb and pay for anything that is not recycled. This is a strong incentive in these times of austerity. The International Herald Tribune quotes Eamon Ryan, Ireland’s energy minister from 2007 to 2011 who said, ‘‘We just set up a price signal that raised significant revenue and changed behavior. Now, we’re smashing through the environmental targets we set for ourselves.”

In Dun Laoghaire Rathdown County in south-eastern Dublin, each home’s “black bin” for garbage headed to the landfill is weighed at pickup to calculate quarterly charges. Green bins for recyclables are emptied free of charge. “There was a big furore initially, but now everything I throw out, I think, ‘How could I recycle this?’ ” said Tara Brown, a mother of three.

High profile economists from both sides of the political divide like Jeffrey Sachs and Greg Mankiw have long argued that taxing the “externality” (e.g. carbon emissions or rubbish) is the most effective and efficient way to reduce pollution and waste. Market-based instruments like carbon taxes can also be used to reduce carbon emissions from trade by including aviation and shipping in tax or carbon trading measures.

Politicians may privately agree with the dismal science, but have been loath to introduce carbon taxes – is the tide now turning?

On carbon taxes (and other market-based mechanisms) in agricultural trade see:
Kasterine, A. and Vanzetti, D. (2010) The Effectiveness, Efficiency and Equity of Market-based and Voluntary Measures to Mitigate Greenhouse Gas Emissions from the Agri-food Sector, UNCTAD Trade and Environment Review, Geneva.


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