By: Abdihakim Mohamoud
Environmental taxes, also known as carbon taxes, are fees companies are charged for every ton of emissions they produce in hopes of lowering emissions. The first country to implement these taxes was Sweden in 1991, and they have been very successful in doing so.
After countless studies and investigations about the impacts of environmental taxes, data shows that environmental taxes have positive effects on reducing emissions among companies. Research from Sciencedirect.com stated that sulfur dioxide, dust, and nitrogen oxide were significantly reduced from fossil fueled power plants when the environmental taxes policy was implemented.
After China implemented the Environmental Protection Tax law a few years ago, research began estimating the effects of environmental taxes and air pollution in China’s provinces. Compared to the pollution discharge fee policy (which was the previous law in place), pollutants decreased by 4.8 tons after the new policy was introduced.
While having a positive effect on city-level pollutants, environmental taxes were proven to have limited effects on larger, state-owned coal power plants. While the implementation of them may be beneficial for local firms, it is recommended that local governments seek other measures.
The main reason for environmental taxes being controversial is that individuals against them claim they would hurt countries GDPs. Although the tax would come back to consumers in the form of lower income taxes or a reimbursement check, others argue it would benefit bigger businesses rather than lower to middle class people.
In the end, multiple data statistics show environmental taxes having positive effects on a global scale. However, heated debates and controversy about what to do with tax revenues are still prominent. This leaves us with some questions—Should environmental taxes go back to the consumer? Or should it help us progress towards a bigger economy? These questions are yours to ponder upon.
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