Carbon taxes make sense
It’s not a question of political dogma, it’s a question of what will work best and most quickly, writes Timo Neubauer.
AmI ultra-conservative and insensitive to social injustice, because I see carbon pricing as an essential tool for tackling the climate crisis?
I generally don’t identify as right-wing (quite the opposite, actually) and my commitment to social justice basically comes with my job description. I amlooking for the best and quickest way to turn our supertanker away from the destructive course that it is currently on.
As an urban designer I constantly struggle with market powers obstructing more carbon-efficient outcomes. It’s like tilting at windmills.
Greenfield suburban houses trump more complex urban regeneration, cars trump active and public transport solutions, central car parking trumps urban housing development. More carbon-efficient policies are often perceived as a waste of ratepayers’ money.
More often than not these destructive preferences originate in distorted price considerations. Pollution, greenhouse gas (GHG) emissions, loss of biodiversity, health and well-being – none of these issues are adequately priced into the market.
Even the more mundane supermarket shop reveals that tomatoes from Italy are cheaper than our local produce. Organically farmed meat is more expensive than internationally sourced meat from heavily polluting, fertiliser-intensive and industrialscale production.
I get it that carbon pricing alone cannot be the solution and that one recommendation – to simply offset all our emissions by buying overseas credits (if prices here hit a price cap defined by an international weighted average of ETS prices) – does not hit the mark. I also understand that raising taxes is a politically unpopular feat. However, a higher carbon fee would help to correct what economist Nicholas Stern called ‘‘the greatest market failure the world has seen’’.
It is necessary. In some circumstances, it can also be efficient – possibly more so than relying entirely on unpopular top-down government-mandated measures to reduce our emissions.
Inevitably a much higher carbon price would have a significant impact on our behaviour and preferences – and it would be so easy to implement. Metaphorically speaking, our own tomatoes and organic meat would finally become cheaper than international produce that relies heavily on global supply chains and high fertiliser inputs.
So why not balance the (apparently) unwelcome carbon tax with politically popular measures, such as dividends (as in Canada) or lowering or abolishing income tax or GST? After all, neither income tax nor GST are known to do very much for social equity.
Why not, for example, recover our entire income tax revenue from a new (significantly higher) carbon tax, levied on a broadened ETS carbon price that encompasses agriculture and any other carve-outs? What’s the harm?
If 50% of our GHG emissions are caused by the wealthiest 10% of our society, then mathematically, this rich 10% would be paying exactly half of the entire carbon tax revenue.
Surely this would be socially fairer than taxing labour or general consumption (while leaving capital gains untaxed) and the outcome could only be rapid decarbonisation of our economy. Just look at the reductions of GHG emissions in Sweden or in other Scandinavian countries that have a much higher carbon price than us.
Labelling such ideas as right-wing is dogmatic and counterproductive. We need to encourage our politicians to pull all the levers available, rather than painting this particular one in a certain political colour.
I understand that a carbon tax may have only an indirect effect on health and wellbeing, and that there are many important issues that might not be affected at all by this measure. However, a significantly raised carbon price does not preclude the implementation of other complementary policies, including public transport and cycleways. And we need the carbon price signal to build popular support for these measures.
As for my field of expertise, I am convinced that a higher carbon price would bolster demand for intensification and the creation of high-quality urban environments, smaller dwellings and, yes, it would offer tangible rewards for walking instead of driving. My urban design solutions would no longer be perceived as ‘‘aesthetic nice to haves’’ and ‘‘pie in the sky’’, but actually as essential tools to decarbonise our lifestyles and save money.
Carbon tax is not right-wing – it is common sense.
Timo Neubauer is an urban designer and small business owner in the Nelson/Tasman region.