Carbon tax: the solution to end pollution?

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The IMF says that fiscal policies must be implemented, such as taxing carbon to promote the use of sustainable energies

Carbon tax: the solution to end pollution?

The Director General of the IMF, Christine Lagarde, and the head of budgetary affairs of the multilateral entity, Vitor Gaspar, assure that to meet the objective of limiting the increase in temperature requires the reduction of one third of carbon emissions and the implementation of a tax of $ 70 dollars for each ton of carbon emitted.

Leer en español: Impuesto al carbono: ¿La solución para acabar con la polución?

According to the IMF, the tax would be the most effective measure to reduce greenhouse gas emissions and thus mitigate the effects of climate change. The taxation of carbon would lead to the reduction of energy consumption and the transition to the production of sustainable energies. The agency also explains that revenues could be oriented in the public finances of the nations.

The International Monetary Fund says in its report that if a tax of only $ 35 dollars was imposed in countries such as China, India, and South Africa, emissions would be reduced by up to 30%.

In this regard, LatinAmerican Post's Economics Editor, Pedro Bernal, believes that the measure would force large powers such as the United States and China to make the transformation to clean energy. This would "allow them to monetize their accounts and inflate their coffers with taxes". As for Latin America, Bernal considers that the tax would be positive. "For Colombia, in particular, it is very good and for the world as well. It forces the industrial powers to make the transition, which are the most responsible in the long run", explains the editor.

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Alejandro Noguera, a Colombian environmental entrepreneur, believes that this mechanism could be useful. "I think it's a mechanism that does work because it does not work as a social nudge for companies to have socially desirable behaviors, it becomes an obligation," says Noguera.

In addition to the environmental component, competitiveness and cost reduction must also be taken into account. "Companies have to create investment plans to improve the quality of their technologies not only because of the environmental care issue, because that happens in the background, but to save costs," explains Noguera.

The entrepreneur gives the example of the beer company Bavaria, "they are committed to reducing the consumption of water, energy, logistics chain, fuel, etc. What they say is that they do it for the environment, but in reality that investment gives many cost guarantees. The same would happen with other companies, the cover is all environmental, but since it is mandatory [to pay the taxes that are imposed on emissions like carbon], in the end they must adapt to this tax to improve their processes".

LatinAmerican Post | Marcela Peñaloza
Translated from "Impuesto al carbono: ¿La solución para acabar la polución?"

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