It’s tiring to read piece after piece about resistance to carbon taxes because they will hit low-income households.
Clearly, they will. That’s why you *have* to provide progressive compensation - direct subsidies best of all - to most vulnerable groups in society. That *has* to be the baseline. Once you present the full picture, the balance of support is much different.
@phdskat you could theoretically do something really clever with sales taxes/VAT to resolve this issue, i.e. provide differential sales tax rates/applicability based upon some specified criteria to manage consumer cost burdens.
The problem is technological, as most digital tax systems currently not up to the challenge of effectively differentiating by consumer.
I believe my team has written something on the previously, will see if I can dig it out if of interest.
@Ahkns I really think it’s much more straightforward than that. Tax emissions at high rate, subsidise progressively - easily done with ‘green cheques’, tax credits or the like.
@phdskat for sake of avoiding misunderstanding, I am not suggesting we do not apply a progressive carbon price / levy - quite the opposite - we need a significant, supported, carbon price (although the rate does need to reflect diversity of MAC - recommend Aviel Verbruggen's excellent "Pricing carbon emissions" for more on that).
What I'm referencing here instead is a way of compensating groups of the population less able to respond to carbon-cost driven price inflation by applying "at checkout" (effectively consumption-adjusted) mechanisms rather than via flat payments.
You could also do something with personal income tax rebates/credits as you suggest, but this realistically couldn't be effectively linked to the actual impact of carbon price-driven inflationary pressures experienced, because most income taxes have no linkage to individual spend on goods and services.
@Ahkns Yeah I like the idea in theory but practically I think it’s much more important to have something that is easy to implement and administer - even if it’s blunt - than something complex but precise (in terms of compensating specific consumption/emission patterns)