Carbon taxes provoke debate on economic impact

California, the most populous state in the United States, has adopted the cap-and-trade system, joining Ireland, Australia, Norway and many other countries in taxing carbon emissions which most agree is one of the major causes of global warming. The cap- and-trade system known as AB 23 puts a dollar price on industry carbon emissions at US$10.09 per metric ton of emission, according to environment reporter Felicity Barringer.
“By putting a price on carbon, we can break our unhealthy dependence on fossil fuels,” said Mary D. Nichols, chairwoman of the California Air Resources Board.
 
Proponents say that taxes on carbon emissions serve as a deterrent and as a source of revenue that can be used to finance clean energy programs, much like the tobacco taxes that have been adopted in many countries. The economist Robert H. Frank, in an opinion article, made the case that high carbon taxes on gasoline would lead to more fuel-efficient cars. On the other hand, a report on Ireland’s carbon tax advantage points out that the Irish government has been able to balance its budget despite three years of recession, in part due to carbon taxes on cars, gas and even garbage.
Opponents of the taxes argue that transportation, utilities and production costs might increase depending on where the carbon tax is applied. In a survey conducted by the Australian Retailers Association, results show that 80% of Australian retailers say their business has been negatively affected by the new carbon taxes since their implementation in July 2012. Russell Zimmerman, head of the retail organization wrote, “The introduction of carbon pricing was a massive legislative change for small business and one which has had a significant impact. In a climate of already- suppressed retail spending, retailers are taking the hit of the carbon tax as consumers bypass the stores to pay household bills.” (January 11, 2013)