The rise in energy prices has brought energy taxes back into the spotlight, just as it did in 2018 with the carbon tax. It is obviously the level of these taxes that is always the subject of debate: some call for a reduction in order to protect buying power, while others refuse to do so on the grounds of environmental considerations, among others. However, the debate is narrow. What does the Government do with the additional revenue? The Government does not just collect, it redistributes. To focus on the level of tax is to look at only one side of the coin.
In a previous study on carbon taxes and markets around the world, I4CE showed the importance of redistribution choices for these "carbon revenues". Financing the low-carbon transition, lowering other taxes, increasing social spending, reducing debt... Countries make very different choices, as you will discover in this newsletter and in the latest edition of I4CE's World Carbon Accounts. But these choices need to be debated, clarified and communicated or they will become a bone of contention.
This is also a lesson for the French presidential candidates. Whatever future they have in mind for the carbon tax and energy taxes more generally, they must clarify now what they intend to do with their revenues and say so. This is a key element of their future "climate budget" which I4CE calls on them to develop.
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#New Report I Global Carbon Accounts in 2021
I4CE has reviewed the countries and provinces with a carbon tax or market. There are 47 of them today, with price levels ranging from less than USD 1/tCO2 to almost USD 150. Revenues from these carbon taxes and markets continue to rise and have reached almost USD 57 billion by 2020. Most of this revenue is earmarked for ecological transition projects or allocated to the general budget. Find all this information and much more in graphics and map.
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Carbon Tax : France can learn from foreign experiences to move forward
In this study published at the heart of the French "Yellow Vests" crisis, I4CE analysed in detail ten countries that have increased their taxation on climate and energy and showed what they do with the revenues from this increase. We drew three lessons for France: be transparent about the use of tax revenues; make visible the counterparts to the tax increase; and learn from its mistakes to build consensus.
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Using Carbon revenues
In this 2019 report, written with the World Bank and AFD and supported by Vivid Economics, I4CE explores the factors that underpin the choices made in the use of revenues from carbon taxes and markets around the world. It also provides a practical guide for policymakers who are implementing or reassessing their national carbon price.
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Taxes on energy or carbon must be part of a coherent reflection on the budget of the States. For example, to avoid taxing carbon on the one hand and subsidising fossil fuels on the other. "Environmental budget taggings" are a way of improving this coherence. We invite you to read the latest I4CE study on this tool.
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