Question

People are concerned that global temperatures are rising and this threatens the global economy. Many blame this on burning of fossil fuels and carbon emissions. Please read the scanned article and comment on what you think. Make these 2 assumptions. First assume that you believe that fossil fuels contribute to global warming. Second you are politically agnostic. What is the best aspect of the tax and what is the worst aspect? Explain

Answer 1

Global temperature is rising over the past few decades. Economists have developed consensus that there must be taxes on economic activities that contribute towards the global warming in form of increased carbon emissions.

Tax on carbon emission will pave way for investments in innovative and clean technologies. Furthermore, revenue collected by the government in form of taxes would be returned back to citizens in forms of rebates.

But one negative aspect of carbon tax is that it would render companies less competitive and there firms can not compete in international market. Moving on, tax will create unemployment in short run.