Carbon Tax.


The proposal of establishing a system of harmonized carbon taxes are being made in different parts of the world. In a harmonized carbon taxation system, the country that will be setting the taxes would be entitled to keep all the revenues incurred from these taxes. The proponents of a harmonized carbon tax system like Dinan and Rogers (2002 ) have proposed that all the participating countries in this system would be subjected to a common carbon tax rate which will help to achieve cost effectiveness in the long term scenarios (Dinan and Rogers 56-60). Nevertheless, the opponents of the harmonized carbon tax system have identified that there may be a number of constraints and problems associated with this kind of taxation system. One major criticism made against the harmonized carbon tax system is that in this taxation format, the developed as well as the developing countries would be subjected to the same carbon tax rate which is not a justified and fair idea. This is because, the relative level of responsibility and welfare towards the environmental and climatic problems is higher for the developed countries as compared to the developing countries because&nbsp. the level of industrialization, the availability of resources and the use of energy sources are more in the developed nations that in the developing nations.&nbsp. As such, the developed counties would not have major incentives in adopting a uniform carbon tax rate. There are many aspects that should be considered to understand the potential issues and solutions.

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