Carbon Tax Pros and Cons


The production process of carbon dioxide is getting bigger and that’s why many people are suffering from environmental issues. If you will analyze the condition of global warming, you will realize that its effect is now getting more serious. In this situation, people should take an immediate action in order to avoid a situation that can affect their life. Actually, the government created a tax that will be against those people especially the businessmen who create polluted elements in the environment. This is the Carbon Tax. The main purpose of this is to “internalize the externality”. This only means that the ultimate price of supplies will be included in the rate of price. This is just like in the “Polluter Pay Principle”.



The Pros of Carbon Tax

1. Lessen the production of carbon dioxide. Businessmen who will attempt to produce carbon dioxide will be required to pay a high amount of tax. In this way, the production of carbon dioxide will decrease.

2. Encourage to use alternative engines. Due to the high payment of tax, businessmen will decide to use safe and efficient engines that don’t produce and release carbon dioxide in the environment.

3. Show the way to social efficient outcome. It is possible that electrical power plant will use green sources in producing electrical energy. Aside from that, people will never depend on utilizing fuel or oil.

4. Increases revenue. The increase of revenue in carbon tax can be used in the production of green electricity. It can also be used in repairing damages that can cause by weather disturbance or the pollution in the environment.



The Cons Of Carbon Tax

1. Businessmen will move in other countries which doesn’t implement the carbon tax. With the high payment of tax, it is possible that many businessmen will move to other countries which don’t promote or follow carbon tax.

2. Expensive. Promoting this kind of tax is expensive and that’s why the government will need a big amount of money in order make it more effective.

3. Provide higher tax. Higher tax payment can also encourage businessmen to produce carbon dioxide secretly.

4. Hold back the development process in the world. The global carbon tax will hold back the developmental process in the world due to the expensive rate of energy.

5. Disregarding of the latest tax. Due to the latest payment of tax, many people will disregard it and they will never be guaranteed if they will become revenue neutral.

6. Inelastic of price. Whether the price will get inelastic or not, the tax payment will surely increase and it will decrease the essential demands of the people.

7. Difficulty in knowing the amount of tax that will pay. For businessmen, they will surely have difficulty to know how much tax they will pay and also the external cost.

How Do You Feel About Carbon Tax?

The purpose of carbon tax is really helpful especially to environment. Due to the high tax and low developmental process, some countries are removing it from their set of laws to implement. They give businessmen some punishment that will avoid them from producing and releasing carbon dioxide. That’s why if you are a businessmen and carbon tax is being followed in your country, it is better for you to use safe machines that will not generate carbon dioxide.