French President Nicolas Sarkozy has decided, as French newspaper Le Monde reports: an environmental levy will be introduced with the starting price of 17 euros ($24.8) per ton of CO2.
While the levy is widely referred to as a carbon tax, Mr Sarkozy insisted that the levy will not increase the tax burden, and promised compensation in the form of a tax reduction for those pay income taxes, or payment of a check for those who don't pay income taxes.
The New York Times reports that Sweden has been using its current presidency of the European Union to campaign for expanding the policy. Sweden has had a similar levy since 1991, when Sweden imposed a levy equivalent to €28, or $41, per ton of CO2. This has meanwhile risen to €128 per ton of CO2, although industries that are exposed to international competition are permitted to pay a lower rate.
The levy has been a success in Sweden. Emissions in Sweden would be 20% higher without the tax, yet the economy has still grown by 44% since it was put in place, said Susanne Akerfeldt, a senior adviser on tax issues at the Ministry of Finance in Stockholm. Denmark instituted its carbon tax a year after Sweden, while Finland, Norway and Switzerland use similar systems, she said.
A study on the push for an EC carbon tax mentions that Holland has had its version of a carbon tax for years. In Ireland, the Commission on Taxation has recommended the introduction of a carbon tax to help cut Ireland’s greenhouse gas emissions, reports the Irish Times.
Outside Europe, parts of Canada also use similar systems, Susanne Akerfeldt said. New Zealand introduced a carbon tax back in 2005, reports the Guardian.
In Japan, where the Democratic Party of Japan recently swept to power, the election promise of cutting carbon emissions by 25% by 2020 (compared with the level of 1990) may require a carbon tax on big emitters, including power utilities and refiners, Goldman Sachs Group Inc. analysts have said, reports Bloomberg. Japan is the world’s fourth-largest energy user.
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Comments: 5
Feebates, of course, would work even better than a carbon tax.
In Spain, which has announced a fiscal reform to raise more money to control a rampant deficit, Prime Minister Jose Luis Rodriguez Zapatero called a carbon tax an “interesting” proposal and added that carbon taxes will inevitably be applied by most countries.