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Discussion > Raff’s Carbon Tax

"It wouldn't be economically neutral, clearly, as it is trying to change the way the economy works by altering the costs of things that emit CO2 (or do so during manufacture) relative to those which don't. Carbon taxes are generally seen as one of the best way to reduce emissions (as Richard Tol) but because of decades of obstruction and denial (CO2 isn't a greenhouse gas, it is just a trace gas, the planet isn't warming, etc) by the right/fossil-fuel industries they have been passed up in favour of inferior schemes like carbon trading or subsidies for renewables. Denial has had its price."

Well this is a pretty poor description from Raff but maybe he’ll expand.

Firstly, the cost of things already reflect the energy that goes into them, and for the foreseeable future the prime source of energy will be fossil fuels. Companies are already very aware of how expensive energy is and aren’t wasting it unless energy is a small part of their costs.

Secondly, the highest energy products are often the most essential. Metal for example. Food for another. Ok, you can favour vegetables and grain over meat but again, the price already reflects that. As you drive the price up, the poorest suffer most.

But Raff says his tax will be economically neutral – so you’ll get back the money you pay out in extra taxes. So I pay extra tax on a steak, but I get the tax back. What am I going to use that money for? Buying the next steak.

Of course, you’ll never get all the money back from the tax because large chunks of it will go missing towards the bureaucracy and fraud that will be involved. It will all be a massive waste of money and time but CO2 will continue to rise.

And how exactly are you going to monitor how much energy a product used in manufacture? How do you compare the efficiency of a massive factory producing shoes with a hand craft cobbler? Are hundreds of workers making surgical instruments in their home (real example) better than a big gleaming factory making them?

I think Raff's tax would crash and burn.

Jun 19, 2016 at 10:57 AM | Unregistered CommenterTinyCO2

Another way it might fail/be corrupted.

China sells all its export goods and carbon zero - because it uses renewable power to make things for export and fossil fule power for internal use only.

Jun 19, 2016 at 11:05 AM | Unregistered CommenterTinyCO2

One of the problems with the scheme is that once a different party is elected to govern they may decide that this tax and give back (less admin costs) scheme isn't working. Rather than scrapping it completely, as they should, they'll leave the tax in place and put the takings into the general taxation pot.

As the tax, in Raff's description, is aimed at transferring wealth from rich to poor more money is going to be spent by the poor on eating and keeping warm. So overall the effect will be to increase energy consumption. That is until a new government removes the general repayment and replaces it with a new scheme which will help the poor far more than the "very unfair and other political nonsense" carbon tax.

Look at how Road Tax morphed into Vehicle Excise Duty (VED) once it became general knowledge that very little of the money raised went into roads. I think that the argument is that in the UK no Tax is raised for a specific purpose, therefore the government of the day can spend it as it sees fit. The same argument applies to this proposed tax.

Jun 19, 2016 at 12:05 PM | Unregistered CommenterSandyS

I agree 100% that this wouldn't work the way it was intended but even if it did, it wouldn't help reduce CO2. In large part because of your point about transferring money from the rich to the poor. CO2 went through the roof because the masses achieved reasonable CO2 foot prints, not because a tiny number had massive footprints. That's why the warmists are keen for poor Africans to stay undeveloped.

Jun 19, 2016 at 12:27 PM | Unregistered CommenterTinyCO2

There's an old saying 'the best things in life are free... you just need money to enjoy them', could be rewritten substituting 'money' for 'energy'.

Jun 19, 2016 at 12:31 PM | Unregistered CommenterTinyCO2

As the Global Warmists have been taking the p!ss for decades, profiting out of others blood sweat and toil, whilst making no effort to do anything remotely constructive themselves, they are a waste of temporary carbon usage, and should be recycled appropriately and quickly, for the benefit of our granddchildren.

What about a Urine Removers Tax?

Jun 19, 2016 at 2:26 PM | Unregistered Commentergolf charlie

It is not as if a tax/dividend is suddenly going to reduce emissions or to make the poor well off. It is more about changing longer term assumptions (that the price will increase year by year) and incentives to reduce emissions. At £10 per ton with emissions of 10-15 tons of CO2 equivalent per person, the dividend would be £100-150 (£6-9bn total). That is negligible to many people and if one wanted it to have more effect it might be better distributed less evenly. But even distribution makes it more socially acceptable. In time, as someone said, that might change. One could change the distribution by making payment dependent on voting for example which might encourage more young/poor people to register to vote but would otherwise skew payment to richer/older people.

And £10 per ton is probably not high enough to alter behaviour, which might require many time that amount. £50 per ton would net £30-50bn and it is hard to imagine a government keeping its hands off that.

Jun 19, 2016 at 2:44 PM | Unregistered CommenterRaff

You don't sound very convinced by your own theory Raff. I pointed out that there aren't any products for people to switch to. Products require a certain amount of energy in manufacturing and performance. Look at the VW scandal. Governments demanded a standard the technology couldn't achieve, so they cheated. Almost certainly a boss somewhere said 'why can't you meet these standards, VW managed it?' We know how well that worked out.

Compare the UK to Germany. Their personal carbon footprint is greater than here in the UK, not because we're more efficient than them but because we've lost our heavy engineering. We still use the products, we just import them. Our biggest reduction was our switch from coal to gas. No more savings to be made. No more coal. Both countries have very expensive energy and the poor are already suffering.

Your plan is little more than hoping.

Jun 19, 2016 at 3:29 PM | Unregistered CommenterTinyCO2

From the timings of your posts I assume you're not a UK resident but perhaps somewhere west of the UK?

The UK has very high duties on vehicle fuels, the most expensive diesel in the EU and amongst the highest petrol (gasoline) and LPG prices. There is also a 5% VAT on domestic energy (electricity and gas), the rest of Europe also taxes these things. So in effect carbon is highly taxed in Europe. Are you suggesting that your tax is added to these fuel duties? If so how do you make the public and those paying aware of what it is for and how it works? As I've said previously in the UK all taxes go into a taxation pot, no tax is levied for specific uses.

You may not be aware but the UK had a Fuel Price Escalator. When combined with a rapidly rising price of crude oil the politicians did what politicians do when their policies are proving very unpopular, they changed direction and removed the escalator.

In an environment of high fuel prices I wondered how your additional tax would change behaviour without triggering a serious problem for government? You can push people only so far, Poll Tax Riots, UK Fuel Protests, and sometimes even leaders who are regarded as saviours of their country can forget the lessons of history

Jun 19, 2016 at 5:16 PM | Unregistered CommenterSandyS

Won't businesses paying a carbon tax have to pass it on to their customers, or do they get a rebate too?

Jun 20, 2016 at 9:57 AM | Unregistered CommenterSandyS

Um, British Columbia has had fee-and-dividend since 2008.

'A report by Sustainable Prosperity entitled BC’s Carbon Tax Shift After Five Years: An Environmental (and Economic) Success Story suggested that the policy had been a major success. During the time the tax had been in place, fossil fuel consumption had dropped 17.4% per capita (and fallen by 18.8% relative to the rest of Canada). These reductions occurred across all the fuel types covered by the tax (not just vehicle fuel). BC’s rate of economic growth (measured as GDP) kept pace with the rest of Canada’s over that time. The tax shift enabled BC to have one of Canada’s lowest income tax rates as of 2012. The aggregate effect of the tax shift was positive of taxpayers as a whole, in that cuts to income and other taxes exceeded carbon tax revenues by $500 million from 2008-12'

Slam dunk.

Jun 20, 2016 at 10:30 AM | Unregistered CommenterPhil Clarke

The moment you start to consider how it would work (or not work) in practice, it becomes obvious it's a daft idea. Almost certainly it would lead to undesirable outcomes. It would be a bureaucratic nightmare. The only way to effectively work it would be to slap the tax on energy... oh hang on, that's what they do now.

A carbon tax pops up as a solution on a regular basis but nobody can explain how it would work any better than what we've got now. Which isn't working.

Jun 20, 2016 at 10:44 AM | Unregistered CommenterTinyCO2

Those objections are hypothetical, it has been tried in real life British Columbia.

A true sceptic examines the facts.

Jun 20, 2016 at 11:30 AM | Unregistered CommenterPhil Clarke

Phil Clarke, quoting "Sustainable Prosperity"

Dank slum

Can I offer a quote by Mandy Rice-Davis? She is a widely accepted authority on such matters of lying biastards trying to protect their interests.

Jun 20, 2016 at 11:31 AM | Unregistered Commentergolf charlie

Apart from wrecking lives, businesses, manufacturing, domestic life etc, what is wrong with a pointless Carbon Tax without any basis in scientific fact?

Jun 20, 2016 at 11:44 AM | Unregistered Commentergolf charlie

British Colombia has a lot of hydro, not something that can be rolled out everywhere. Looking at the chart on this more up to date article suggests the falls in emissions from 2005 to 2014 are minimal. Other states had smaller emissions levels and bigger reductions than BC.

Even your article states “although declines levelled off after the last tax increase in 2012”. Is says a lot that you article is 4 years old and started in 2008 but hasn’t been hailed as a great success.

What you don’t seem to understand is that the first few tonnes of CO2 are easy to shed, especially if cheap energy has caused people to be lazy and wasteful but there comes a point where you need the energy you use. Without an alternative to switch to you have no choice but to pay the tax or do without.

Jun 20, 2016 at 11:58 AM | Unregistered CommenterTinyCO2

The latest numbers from Statistics Canada show that B.C.’s policy has been a real environmental and economic success after six years. Far from a being a “job killer,” it is a world-leading example of how to tackle one of the greatest global challenges of our time: building an economy that will prosper in a carbon-constrained world.

B.C.’s tax, implemented in 2008, covers most types of fuel use and carbon emissions. It started out low ($10 per tonne of carbon dioxide), then rose gradually to the current $30 per tonne, which works out to about 7 cents per litre of gas. “Revenue-neutral” by law, the policy requires equivalent cuts to other taxes. In practice, the province has cut $760-million more in income and other taxes than needed to offset carbon tax revenue.

The result is that taxpayers are coming out ahead. B.C. now has the lowest personal income tax rate in Canada (with additional cuts benefiting low-income and rural residents) and one of the lowest corporate rates in North America. You shouldn’t need an economist and a mining entrepreneur to tell you that’s good for business and jobs.

Jun 20, 2016 at 12:15 PM | Unregistered CommenterPhil Clarke

It's funny how hard it is to get up to date information about CO2. It's almost like everyone is trying to gorget about it.

It's also worth noting that Canada's CO2 footprint per capita is about 21 tonnes, 2.5 times greater than ours and higher even than the US.

Try again Phil.

Jun 20, 2016 at 12:17 PM | Unregistered CommenterTInyCO2

Both articles say that fuel use is down 16%, so there was no change between 2012 and 2016.

Jun 20, 2016 at 12:29 PM | Unregistered CommenterTinyCO2

The 12.9% decrease in British Columbia’s per capita emissions in 2008-2013 compared to 2000-2007 was three-and-a-half times as pronounced as the 3.7% per capita decline for the rest of Canada.

The reduction has indeed levelled off in recent years, probably because the increments in rate stopped in 2012, allowing inflation to take a bite. A large number of businesses believe the tax should now be increased.

However you look at it, the facts from a real-world implementation are a stunning endorsement of Raff's vision.

Jun 20, 2016 at 1:44 PM | Unregistered CommenterPhil Clarke

Tiny shavings off a huge total Phil. Taxes can make you more efficient, they can't work miracles.

According to your link emissions stopped falliing in 2010 compared to the rest of Canada but it didn't reach $30 before 2012. Emissions in Canada as a whole have risen, not fallen. between 2011 and 2012, the rest of Canada did better than BC.

It's telling that they haven't shown the raw up and down figures and have just compared it to the rest of Canada, which makes it look more successful.

Jun 20, 2016 at 2:06 PM | Unregistered CommenterTinyCO2

It's also worth noting that BC improved more between 2004 and 2008 against the rest of Canada than between 2008 and 2012. Before they inroduced the tax.

Jun 20, 2016 at 2:15 PM | Unregistered CommenterTinyCO2

Sandy (I think), it wouldn't just apply to fuels but to emissions throughout the economy (and not just CO2).

Tiny, your example of VW shows that you have the wrong idea of how things work. They were not given an emission level that could not be achieved. Emissions were one design parameter, along with price, design effort, weight, efficiency, acceleration, durability, accessibility and doubtless many others. Design involves compromise and VW chose to compromise on the legal emissions standard instead of other design goals. They are the scumbags, not the EU for setting stringent standards (although regulators/politicians/auto-industry are clearly also scumbags for not enforcing standards).

Adding a rising carbon tax changes incentives all the way through that list of compromises in product design (or service provision) so that whatever causes emissions becomes more expensive. That might lead to a change in material thickness or composition or a change to an additive process or a reduction in packaging or changes in delivery routes and times etc. The list of things that can change when the cost of inputs changes is infinite. The idea that everything is already optimized and can't be improved just reflects a current balance (one of many) that happens to be profitable.

Jun 20, 2016 at 2:26 PM | Unregistered CommenterRaff

GDP is also a poor metric to measure the success of a CO2 reduction scheme. Steel manufacture isn't a high GDP industry but it emits a lot of CO2. Computer companies might be scarecely affected by an increase in tax on CO2 but they'd struggle without the products from heavy industry. A state or a country can circumvent high footprints by importing the relevant products but it doesn't save the CO2 entering the atmosphere.

Jun 20, 2016 at 2:26 PM | Unregistered CommenterTinyCO2

"They were not given an emission level that could not be achieved." they were in the US. In the time they were given and with all the other demands on a car.

That nearly all the car companies cheated, indicates it was nigh on impossible. As I told my boss when he said he wanted something and said he didn't want to hear 'can't' - 'ok, which code do you want me to charge the £million bill to?' Lots of things are possible, they're just not viable.

If you make too many rules without caring whether it's possible, sure you can get what you think you want. Cars can be made lighter - but then a lot of people have paid good money for all that extra weight in roll bars, crumple zones, bumpers, air bags, anti lock brakes, etc, etc. If you compare modern cars to old ones you can see exactly why they're much heavier than they used to be (and it's not the cup holder) but you know which you'd rather travel in, let alone crash.

Jun 20, 2016 at 2:49 PM | Unregistered CommenterTinyCO2