Should countries impose a carbon tax?

Should countries impose a carbon tax?

Should countries impose a carbon tax?

Should countries impose a carbon tax?

As the world deals with the effects of climate change, there have been proactive actions towards dealing with global warming. Countries and corporations adopt measures such as directed towards reducing the level of emissions. With the transport industry identified as a leading contributor to pollution, there is an increasing appreciation and adoption of electric modes of transport. A carbon tax is one measure advocated as having the likelihood to greatly reduce the emission levels of countries. Even so, it has been a point of debate as countries ponder on whether to implement such measures.



So, what is the carbon tax?


A carbon tax seeks to impose a price on the carbon emitted by corporations and countries. Another way to view the tax is as the price of one unit of carbon emitted into the atmosphere. A tax on fossil fuels such as gasoline and diesel is one approach towards implementing the carbon tax. The United Nations define a carbon tax as a ‘compulsory, unrequited payment to the general government, levied on carbon emissions or its proxy that can confer a reduction in corresponding carbon-based (equivalent) emissions in the atmosphere and is thus characterized as having both environmental purpose and effect.’ The fact that carbon taxes put a price on the emission of greenhouse gases pushes organizations towards investing in greener energies. Consumers also have the incentive to invest in energy efficiencies and change their lifestyle habits to ensure sustainable development.


Goals and advantages of a carbon tax

The primary goal of the carbon tax is reducing the level of carbon emissions to ensure positive environmental gains. The basis of the tax is that it provides individuals and corporations with the incentives to avoid the use of fossil fuels that contribute to global warming. The implementation of the tax means that carbon emitters have to deal with the environmental costs of their actions and hence the need to manage emissions. On the other hand, the carbon tax also seeks to disincentivize the investment in carbon-intensive technologies while pushing innovation in greener energy sources. Not only do such approaches contribute to reduced pollution, but they also minimize the health-related costs of environmental issues.

Although not part of the primary goal of carbon taxes, they contribute to considerable revenue generation. The revenue collected from such areas can be directed towards other developmental initiatives. Having an efficient redistribution system of such resources can foster sustainable growth while also creating new employment and business opportunities. An example is that such revenue can go towards supporting innovation in greener energy sources.

Other advantages link to the essence that there will be pressure for a faster energy transition that minimizes pollution and global warming. There will be competition in the renewable energy industry as more companies venture in the market. The approach will also encourage research and development spending on renewable energy. The transition and existence of the tax implications that consumers will change their consumption habits in which will improve the ecological footprint.


Cons associated with the carbon tax


One of the disadvantages of implementing a carbon tax in a country is that corporations may relocate and invest in countries without such impositions. Considering that corporations try as much as possible to maximize profits including through tax avoidance, this approach can drive the loss of investments in certain countries. The implication is that countries have to work together in implementing such a system.

Another issue arising from the carbon tax approach is that there may be lack a of consensus on the right carbon price. The differences will emanate from the varied political and economic systems that define countries around the world.

Also emerging as a problem is that corrupt regimes will have access to more resources to plunder. Most governments especially in developing countries have inefficient systems that foster corruption and misappropriation of funds. Implementing such a tax would be difficult due to the concerns of whether the public stands to benefit.

Countries should impose the carbon tax

Based on the advantages and disadvantages discussed, the carbon tax presents an effective approach to dealing with global warming issues. The incentives provided will ensure that corporations invest in renewable energy and reduce the level of emissions. Countries that have already implemented the tax are enjoying their benefits. the United Kingdom imposed a tax of about 25 dollars per ton in 2013 and this led to a sharp decline in the use of coal and the achievement of the lowest greenhouse gases since 1890 (Lewis, 2021). Similarly, Canada and Sweden have successfully applied the tax in reducing the level of emissions.

The implementation of the carbon tax in Australia in 2012 failed and led to its abolishment in 2014 (Lewis, 2021). The failure was a result of the poor political will and communication on who would benefit from it. Despite this, carbon emissions decreased significantly in the two year period. The outcomes point to the effects of political elements on the effectiveness of the tax.

The success of the carbon tax will depend on the extent to which consensus exists within and outside individual countries. Having a unified approach to imposing the carbon tax will lead to its success. More so, this will guarantee sustainable development in an era characterized by climate change challenges.




Lewis, J. (2021). Carbon Tax Pros and Cons: Is Carbon Pricing the Right Policy to Implement? Retrieved from