Showing posts from September, 2009

Carbon Tax: Fiscal Exit Strategy of the Crisis

In the summer of 2008, when the fuel prices were at their highest, I published an  op-ed in the European Voice . I supported the idea that president Sarkozy had at the time, namely, to reduce the VAT and excise duties on petrol, to make it cheaper. The argument was that if the CO2 is indeed the enemy then it should have a price, and this price needs to be the same regardless if CO2 is emitted by a car, a powerplant or a production of a steak. In  January on this blog  I criticized the idea of NASA’s Jim Hanson to tax carbon at the port of entry. Not only it would create trade wars and will be seen as an excuse for protectionism, it will make the economies of countries with such tax less competitive to economies without the tax. Exactly the same is the problem with carbon caps and emission trading schemes. Carbon intensive industries are “leaked” to countries where such measures do not exist. Today I am reading about president  Sarkozy’s proposal for a carbon tax.  This is a step in the