Friday, January 02, 2009

We Need a Carbon Tax Now!

If you thought that the spike in oil prices would have a lasting effect on people's energy use habits, think again. No sooner had gas prices retreated from their historic highs, and in the middle of the toughest recession in recent memory, American are back to their ol' tricks: buying gas gulping monster trucks for their daily drive to the office. A couple of days ago CNN reported that SUV and truck sales are going to account for more than half of all vehicle sales in December - reversing a recent trend.   

This will simply not do. At a time when the world seems to finally be getting ready to do something about global warming, it is clear that high gas prices had a profound impact on people's driving and car buying habits. The best way to ensure that such good habits are maintained in what is destined to be a temporary (but possibly not a short) period of oil price collapse, is for government to impose a carbon tax - possibly in the form of gas taxes, with the objective of getting gas prices closer to about $4 per gallon.

Now before you all come screaming at me about the stupidity of raising taxes in a recession, there is no reason why this increase should impact consumers. For example, government could pass the funds raised by this tax back to taxpayers, in the form of an income tax reduction, sales tax reduction or some form of rebate. The trick is that we should not be causing financial hardship for those who can least afford expensive gas, but gas itself must become dearer so that folks will continue to have an incentive to save energy, buy reasonable vehicles and reduce carbon emissions. To read more about why I think a carbon is necessary, see this previous post

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William said...

Agree with you 100%. Place a $2 carbon tax on each gallon of gas and use that for alterntative fuel research. The only way alternative fuels will ever take off is if gasoline prices are painful.

Shadox said...

The problem with gas prices is that gas users do not pay for the full costs that they generate by consuming it (e.g. the pollution, global warming, or the costs of maintaining evil regimes in the middle east to ensure our oil supplies are secure). Gas should be priced such that users bear all the cost of their consumption.