Taxes on labour to be gradually reduced and replaced by the taxation of CO2 emissions, non-renewable resources, land value gains and financial speculation. Government budgets to support the transition to sustainable societies and economies.
Since the start of the Industrial Revolution, our increasing dependence on a carbon-based economy has meant that a growing economy brings us ever closer to irreversible tipping-points of climate chaos and ecosystem destruction. Yet, there is another way where our prosperity does not have to come at the expense of future generations.
Instead, economic incentives must be used by policy-makers to promote environmentally beneficial activities. By internalising the cost of harmful externalities, prices ought to reflect the ‘true cost’ of our economic activities and be used to promote sustainable wealth creation.
As part of a green tax shift, one available tool is a carbon tax – an ‘ecotax’ which raises the cost of fossil fuel consumption and sends a price signal that reflects the real damage fossil fuels cause to our environment and aims to lower emissions as well as encouraging investment in renewable sources of energy.
The revenue raised from these so-called ‘smarter’ taxes can instead be used to lower other, more burdensome, taxes such as that on income. This green tax ‘shift’ towards more environmentally-beneficial activities is described as ‘revenue-neutral’ when the increase and decrease in taxes are balanced out. Some suggest that such a shift can disproportionately impact lower income groups, but, measures are available to policy-makers to counter this where needed.
The IMF has estimated that green taxes as described above, could lead to a 23% reduction in global carbon emissions as well as a prevention of 63% of fossil fuel pollution-related deaths once implemented! Green tax shifts will encourage not only our transition to 100% renewable energies but also mean that our economic activities will secure, and not destroy, our health and environment.
The Monetary Cost of the Non-Use of Renewable Energies
It is often claimed that renewables are still too costly and not yet competitive with conventional energy sources. But what costs are incurred when renewable energies are not used? Every day during which potential renewable energy sources are not utilised but exhaustible fossil fuels burnt instead speeds up the depletion of these non-renewable fuels. This study concludes that, estimated conservatively, the future usage loss resulting from our current oil, gas and coal consumption is between 3.2 and 3.4 trillion US Dollars per year.