Carbon tax is a special tax charged on products and services that tend to pollute the environment. Every industry that harms the environment in some way, every company that makes or deals in products or services that has a significant impact on the carbon footprint or contribution to greenhouse gases will be charged a carbon tax. In simpler words, if you run a business or carry out any operation that increases the particulate matter in the air, makes significant contribution to the content of carbon dioxide, carbon monoxide and other harmful gases, leads to clearing of forests or cutting down of natural green cover in areas and have a substantial toxic output of some form, then you would have to pay a carbon tax. Like all other taxes, there are some carbon tax pros and cons.
List of Pros of Carbon Tax
1. Carbon tax is necessary to discourage companies and individuals from engaging in operations or businesses that harm the environment.
It is like fining drivers who are under influence, issuing ticket for speeding or something as typical as having building codes to ensure that everyone follows the law. Without carbon tax, everyone would have a free run and anyone can have any dire impact on the environment without being held responsible.
2. Carbon tax encourages companies to come up with ways that are greener or more environment friendly.
For instance, companies may look at renewable energy to fuel their operations. They may use better quality filters or have safeguards in place to avoid letting out toxins or industrial waste in the environment.
3. Carbon tax means more money for the local, state and federal government.
Those that harm the environment must contribute more to replenish the natural resources. This way the ordinary citizens are not burdened with extra tax or effort to undo the damage done by others.
List of Cons of Carbon Tax
1. Carbon tax hinders growth.
By levying additional costs on running a business, companies will think before expanding. They may not even expand. Their production capacities may remain stagnant. This will have a bearing on the economy. There may be issues with the supplies and job growth will take a hit.
2. Increased burden to the business.
Companies already reeling under several taxes are further burdened with another tax. Carbon tax can hit profitability and may even question the viability of a business in some cases.
3. Can be evaded by companies that don’t want to pay.
Like all other taxes, companies can always come up with ways to evade the carbon tax or pay much less than what they are supposed to.Taxes that have existed for over a hundred years are yet to be imposed in a foolproof way. Carbon tax is certainly not executed with impeccability.
