Thursday, May 15, 2008

Make a carbon task costly

There's been much to and fro about Dion's proposal for a carbon tax. Look for it and you'll find it, if you wish.

Here's his idea in a nutshell: he's going to tax heating oil and other carbon emission sources, but not gasoline. Then he's going to cut your income tax. The whole thing is going to be a shift of $15 billion of so.

Here's the consequence: basically no one likes the idea and even less people believe that the tax shift is going to be neutral.

Here's what he should do: propose a carbon tax which is actually going to cost people more if they drive. This would be more effective, more honest, and more believable. And, believe it or not, there's a segment of the population (somewhere between 30% and 40%) who are more likely to support a policy when they are aware that it will cost them something.

I was lucky enough to run some survey experiments on a carbon tax for my dissertation. I may write about them in more detail at some point, or I may continue to embargo the results while they're under review. Either way, two facts stand out: a sizeable amount of the population is willing to pay more in taxes in exchange for a carbon tax. And a sizable portion is also more likely to support the policy when they think it will cost them something.

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