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World Bank Head Pushes Carbon Tax Policies

by Mike Godfrey,, Washington

18 December 2014

The President of the World Bank Group, Jim Yong Kim, has said that all countries should commit to placing a price on carbon emissions to prevent global warming from reaching dangerous levels.

Nations have agreed to implement policies to keep the average global temperature rise below two degrees Celsius, the limit agreed internationally to stave off irreversible climate change.

"Effective prices on carbon can be discovered by taxes, market mechanisms, or regulation," Kim said during a recent speech at the Council on Foreign Relations. "Whichever option a country, region, or city chooses, a carbon price makes the pollution we don't want more expensive and incentivizes efficiency and clean production."

"Carbon pricing can raise revenues, and these added resources can be used to generate more economic and social benefits," he added. "We can do this by, for example, moving from 'taxing the goods' to 'taxing the bads;' by using carbon tax revenue to reduce labor and investment taxes and to encourage job creation and economic development, or by supporting innovation and the development of green technologies through research and development subsidies."

Kim praised the carbon pricing mechanism adopted by the Canadian province of British Colombia. The carbon tax, which was introduced in 2008, has been offset by reductions in other tax rates, thereby avoiding an increase in the overall household tax burden. Since its introduction, the carbon tax has reduced emissions and provided a net benefit to taxpayers of CAD300m (USD258m) in personal and business tax cuts, Kim said.

On December 14, 2014, the Governments of 196 countries agreed on a way forward in negotiations towards a multilateral agreement on climate change. Nations hope to have this agreement finalized by December next year.

TAGS: environment | tax | investment | business | tax rates | carbon tax | Canada | regulation | research and development

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