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Higher Carbon Tax on Luxury Goods, Say Researchers
Presently most carbon taxes are uniform across all economic sectors - and in the developed nations, their impact disproportionately affects people on lower incomes and are not extensive enough to have a "profound impact on emissions".
The researchers say a differentiated carbon tax system would be fairer as the tax would set higher rates for users of luxury goods and services, which are predominantly consumed by the better off.
Under the theoretical model described in the paper, the revenues generated from the carbon tax could be used to retrofit insulation in the homes of poorer families to reduce domestic energy consumption.
[...] "The scheme we are proposing will introduce a higher carbon tax for luxury goods, such as flying long-haul or driving a high-performance car, and a lower carbon tax for goods and services that meet basic human needs, such as providing housing, cooking and healthcare."
But the study team warn that if a luxury goods taxation scheme is to work and deliver significant reductions in carbon dioxide emissions, in line with those set out in the Paris Agreement, it needs to be introduced "promptly, universally and with high and rapidly rising carbon prices as compared to any policy currently in place".
[...] A fair and luxury-focused carbon taxation system is needed because technological solutions alone will not deliver the reduction in carbon emissions that are needed to keep global warming within 1.5 °C. If those solutions do come along, the researchers say the taxation system could then be suitably amended.
"It cannot remain status quo to continue environmentally damaging luxury activities unabated while awaiting a technology fix," they say.
Journal Reference:
Yannick Oswald et al., Luxury-focused carbon taxation improves fairness of climate policy [open], One Earth, Volume 6, ISSUE 7, P884-898, July 21, 2023. DOI: https://doi.org/10.1016/j.oneear.2023.05.027 [doi.org]
