California, European Union can give China guidance on building ETS
Jorgenson said a carbon tax might be a more efficient approach for the services section of an economy. “The idea is that if the carbon tax is administered as part of a tax system, then the collection would be in the hands of the tax authority, which already interacts with all of these firms, even the smallest of them, through the existing tax system,” he told the Harvard Gazette.
He said that if China does decide to use a carbon tax for a portion of its economy, the country will have to answer, “How do you integrate a carbon tax that prevails in one part of the economy with a trading system that prevails in another part?”
China may want to look at British Columbia for guidance on a carbon tax. The province is Canada’s third-most populous, and it began taxing carbon dioxide and other greenhouse-gas emissions from combustion of fossil fuels in 2008.
According to the US-based Carbon Tax Center, since 2008 per capita emissions of carbon dioxide and other greenhouse gases covered by the British Columbia tax have declined, continuing a downward trend that began in 2004. Averaged across the period with the tax (2008 through 2013; no data are available for 2014), province-wide per capita emissions from fossil-fuel combustion covered by the tax were nearly 13 percent below the average in the pre-tax period under examination (2000-2007).
However, not all are supportive of a carbon tax. The American Energy Alliance (AEA), the advocacy arm of the Institute for Energy Research, said carbon taxes make gasoline and electricity more expensive, with a heavier burden on low-income earners. It will also increase the price of most goods and services since energy is a key cost component, the AEA said.
Jorgenson noted that Australia once had a carbon tax and repealed it.
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