World Leaders Unite In Calling For Carbon Taxes

by Mike Godfrey, Tax-News.com, Washington

21 October 2015

Heads of state from around the world convened on October 19, 2015, ahead of the Paris climate talks, to urge countries and companies to put a price on carbon.

The call to price carbon came from the Carbon Pricing Panel, which includes German Chancellor Angela Merkel, Chilean President Michelle Bachelet, French President François Hollande, Ethiopian Prime Minister Hailemariam Desalegn, Philippines President Benigno Aquino III, Mexican President Enrique Peña Nieto, Governor Jerry Brown of California, and Mayor Eduardo Paes of Rio de Janeiro. The Panel was convened by World Bank Group President Jim Yong Kim and International Monetary Fund (IMF) Managing Director Christine Lagarde.

"Finance ministers need to think about reforms to fiscal systems in order to raise more revenue from taxes on carbon-intensive fuels and less revenue from other taxes that are detrimental to economic performance, such as taxes on labor and capital," Lagarde said. "They need to evaluate the carbon tax rates that will help them meet their mitigation pledges for Paris and accompanying measures to help low-income households vulnerable to higher energy prices."

Bachelet noted that Chile has enacted environmental taxes on the transportation and power sectors. "Both taxes will be instrumental in cleaner power, and more efficient cars, which will make our air cleaner, and our climate safer. And the revenue goes to fund our educational reform," she said.

In addition, Peña Nieto pointed out that Mexico has established a fossil fuel tax "which will foster clean technologies."

The World Bank noted that the Canadian province of British Columbia was an early mover on carbon pricing, with the creation of a carbon tax in 2008, with the tax used to cut income taxes and fund tax credits.

TAGS: environment | Finance | tax | Chile | energy | International Monetary Fund (IMF) | Ethiopia | Mexico | Philippines | environmental tax | tax credits | education | tax rates | carbon tax | tax reform