Carbon Pricing to promote Public Goods

Carbon Pricing for Public GoodsGeneva, January 25. By Adam Koniuszewski, GCSP Fellow

The Cost of Carbon Pollution

The enormous economic, social and environmental costs of climate change have been widely recognized since Nicholas Stern worked on quantifying them a decade ago. These costs however remain largely unaccounted for in the marketplace. This failure to apply the polluter pays principle distorts prices, encourages carbon pollution, and gives fossil fuels a competitive price advantage over cleaner alternatives.

Pricing Carbon

A number of nations, including Scandinavian countries, Switzerland and Italy, are trying to correct market signals by pricing carbon. In 2016, carbon pricing covered 13% of global emissions; a number that is expected to reach 50% of emissions by 2030. Carbon pricing, in the form of a tax or carbon trading, generated $50 billion in government revenues in 2015.

A “Framework Convention for Carbon Control” 

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The author suggests that carbon pricing experiences have produced valuable lessons for more governments to adopt it. In fact, there is now a compelling case for creating a “Framework Convention on Carbon Control” (FCCC) and an independent agency to oversee all aspects of carbon emissions and sequestration. Inspired by the successes of the “Framework Convention for Tobacco Control” (FCTC) in alleviating the smoking epidemic, the carbon control convention would be designed to fix market failures and insufficiencies that create de facto subsidies for carbon pollution.

The author also suggests that by ending fossil subsidies and implementing carbon pricing, nations can generate a revenue base that could be used to reduce corporate and personal income taxes. In addition to supporting national priorities like health and education, carbon finance can also fund the universal goals represented by 2030 sustainable development agenda.

For more see:  Winning the Tax Wars – Tax Competition and Cooperation 

Published by Wolters Kluwer, Jan 2018 (see chapter 9)

About “Winning the Tax Wars”

Tax Wars Book FlyerThe book is the outcome of the 2016 TaxCOOP conference at the World Bank in Washington DC on the impacts / solutions to international tax competition. It covers transfer pricing / profit allocation between tax jurisdictions, the need for compliance, investigations and protecting whistleblowers, wealth taxation in an increasingly unequal world, derivatives and hedge-funds, tax investigations, electronic commerce and crypto-currencies, and sin taxes. Its authors, editors and experts include: Brigitte Alepin, Blanca Moreno-Dodson, Louise Otis, Allison Christians, Vanessa Houlder, Lyne Latulippe, Patricio V. Marquez, Richard Murphy, Erika Siu, Eric M. Zolt and Adam Koniuszewski.

About TaxCOOP

TaxCOOP is an international independent and nonpartisan conference on tax competition and the weaknesses of the current tax system in the era of globalisation. Thanks to its various initiatives, TaxCOOP is now recognised as one of the most influential tax initiatives globally.

 

Winning the Tax Wars

I authored the chapter on Carbon Pricing in this new and most timely book on global tax competition: Winning the Tax Wars:

Tax Wars Book Flyer

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The book, resulting from a TaxCOOP Conference at the World Bank in Washington DC in 2016, covers how tax competition has evolved and its impact on developed and developing countries, the state of play when it comes to multinationals and transfer pricing / profit allocation between tax jurisdictions, the need for compliance, investigations and protecting whistleblowers, the need for a wealth tax in an increasingly unequal world, and, tobacco taxation.

A full chapter is devoted to promoting public goods and addressing climate change through carbon pricing along with recommendations to solve the growing crisis of tax competition represents my contribution to this important and authoritative work.

For more about Taxing Wealth by Richard Murphy check here.

The last TaxCOOP Conference took place at the United Nations Office at Geneva on October 16, 2017.

 

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Thanks to such initiatives, TaxCOOP has become the only conference in the  top 50 most influential on the global tax scene.

TaxCOOP Top50

More on this soon.

 

 

The unfair battle of Man vs. Machine

After an article about the role of science for good and evil (Bronowski on Science and Human Values) I now explore how robots will take over most jobs and ask myself why this takeover needs to be subsidized by our taxes.

The old debate about automation and employment (ref. Luddites in 19th Century England) is taking new proportions as most jobs, including white-collar jobs are now at risk. In the US close to 50% of the workforce is in danger of being replaced by computers and robots. In the UK 35% of jobs could be gone within two decades.

Humans, Robots and the Tax Code

Robots can work 24/7 and during holidays (excluding maintenance and repairs – the equivalent of our holidays and sick leave). But a more perverse advantage is granted by the tax code through generous breaks link accelerated and even bonus depreciation as well as various credits that help reduce the upfront cost of robots. Labor in contrast is hit by punitive taxes through social security, unemployment, medical, pension, insurance and other forms of taxation that discourage employers from hiring people and paying decent wages.

With a global workforce of 3 billion and 200 million unemployed (2012), the robot revolution will exacerbate inequalities between owners of capital and those who rely on wages for their livelihood and dignity.

A controversial revolution

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Bill Gates, Elon Musk and Stephen Hawking have joined 1,000 eminent scientists in a petition warning about the dangers of developing robots and artificial intelligence that can learn emotions and develop a conscience. They fear this could be our last invention as robots, having developed a Darwinian instinct would then turn against us.

Subsidising the transition to unemployment and misery

The robot revolution may be inevitable but I wonder why this transition to mass unemployment and human misery must be accelerated by government policy and funded by us, individual and human taxpayers (mostly through employment and personal income tax ). In 2010, 82% of US Federal Tax revenue came from individuals and payroll taxes, only 9% from corporations…