How to use tax to tackle carbon emissions

Tax is being used in new ways in the fight against climate change. On Tuesday European countries voted to create the world’s first carbon import tax. 

The tax will be raised on goods entering the European Union. The rate will be based on the amount of carbon dioxide (CO2) emitted when the product is manufactured. 

It attempts to stop European countries exporting their CO2 intensive production to nations with lower environmental standards. It aims to incentivise Europe’s trading partners to decarbonise their manufacturing.

This is an example of tax being used to incentivise better environmental behavior among companies and industry. Every country needs to do this to fight climate change.

A just transition

Last week climate activists, Extinction Rebellion held “The Big One” a four day rally to keep climate change on the agenda. However, we have a long way to go in the UK. According to a new poll, only a third of people think the government is doing enough to tackle climate change.

Indeed our government actually subsidises (IE gives money to) the oil and gas industry  Since 2015 the government has given £20 billion more to fossil fuel companies than han the renewables industry.

This needs to stop. We should not be giving polluting companies tax incentives to continue with business as usual.

Instead we should be using tax to encourage them to decarbonise their production processes.

At Tax Justice UK we also believe that the transition to a more sustainable economy will require huge investment from the government in industry and new technologies. But this transition must be just. 
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It should be paid for, in part, by taxes on the very wealthy and wealthy companies. We agreed on a set of principles for a just transition alongside other organisations including climate groups.