Carbon Tax and Dividend Endorsed by Irish Prime Minister

Carbon Tax and Dividend Endorsed by Irish Prime Minister

The Taoiseach (Prime Minister) of Ireland, Leo Varadkar, has just endorsed a carbon tax in which all funds go to a direct cash dividend. This came in a letter to the Green Party of Ireland and has been confirmed by the press. Varadkar was responding to questions posed by Eamon Ryan during a session of the Dáil (Parliament). Ryan calls for “an increase in [the] carbon tax in which every single cent would go back to the Irish people—a dividend.” Eamon Ryan is the Green Party’s leader in the Dáil (Parliament).

Ryan considers Varadkar’s response to be an endorsement of the Green proposal. The Green Party has issued a press release. In it, they express pleasure to hear that the government likes combining a carbon tax with a cash dividend but stress that they consider alternative energy and transportation to be their highest priority in addressing climate change.

In his address to the Dáil and in an interview on the Irish Times’ “Inside Politics” podcast, Ryan calls for an increase of €20 per ton in the carbon tax, with an increase of €5 per ton each year until it reaches €90 per ton. The tax revenue would be entirely returned to the public as a dividend. (If you consult the podcast, discussion of the carbon tax and dividend begins at 20 minutes and forty seconds).

Illustration posted by Eamon Ryan on his Twitter feed.

“Every single cent that will be raised will be returned with a check in the post.” In the podcast, journalist Hugh Linehan makes it clear that this would be cash that goes directly to everyone in Ireland. Ryan points out that those with lower incomes would come out with more cash than they have to pay in increased taxes. He sees this as a way to avoid a popular revolt against a carbon tax like the one Emmanuel Macron has seen in France. He hopes that this will retire the debate over the carbon tax and achieve larger changes in energy and agriculture. “[The carbon tax and dividend] will deliver maybe five, ten, fifteen, or twenty percent of the change we need.”

The Irish Times is considered the paper of record in Ireland.

The Green Party (Camhaontas Glas) has two members of the Dáil Éireann. If they gain more seats in the next election, they are considered a likely coalition partner in a future government.

The current government is run by Fine Gael, a party that caucuses with Conservative parties in Europe but seeks to be seen as pragmatically responsive to poverty and ecological issues. Ireland has seen campaigns to prevent increased water charges and to promote public action on housing.

The Irish Times has surveyed government leaders in Ireland who seek to emphasize that carbon tax increases would be “revenue neutral”, returning all funds to citizens as a dividend. The dividend is seen as a way to meet the climate change obligations set by the European Union without harming lower-income people.

In the discussion of the carbon tax and dividend, there is no discussion from the government or the opposition parties of the carbon tax and dividend as a basic income. Green Party Leader Eamon Ryan is very careful to stress that the dividend is just a small part of a plan to make Ireland ecologically responsible.

A year ago, the Irish Times ran an opinion piece in which Ian Goldin presumes a basic income would be financial destructive and would replace existing programs. Basic Income News columns have demonstrated the method Goldin uses to make his calculation is flawed. The mistake here is to calculate gross costs instead of net costs. This means that basic income can be implemented without cuts in other social provisions. Calculations show that the poverty rate could be brought down to zero if three to four percent of a country’s GDP is dedicated to a basic income.

The idea that a carbon dividend is a basic income has not arisen in the Times or in the debate in the Dáil. The term “basic income” has not come up in the discussion of the carbon tax. This reflects a pattern found elsewhere. If a dividend is debated as an answer to poverty, it faces more scrutiny than if it is debated as a repair for the regressive effect of another policy.

Basic Income Ireland and Social Justice Ireland promote the idea that basic income has emancipatory potential. The idea that three to four percent of a country’s GDP could fund a dividend that abolishes poverty is still not being debated by any of the parties currently in the Dáil.

United States: Economists’ Statement on Carbon Dividends

United States: Economists’ Statement on Carbon Dividends

“The answer is blowing in the wind”. Picture credit to: BBC News.

It’s official. Twenty-seven Nobel Laureate economists, four former chairs of the Federal Reserve, fifteen former chairs of the Council of Economic Advisers and two former secretaries of the US Department of Treasury now agree: a carbon-tax must exist, and its dividends should be distributed back to all US citizens. It is relevant to say that most of these co-signatories are ‘former’ actors of these important economic institutions, which may leave an open question mark on whether the present officials at these institutions also corroborate their support for this basic income-like carbon taxation policy.

According to long-time basic income advocate and researcher Philippe van Parijs, “this amounts to the endorsement of the Paine argument for basic income by a remarkable congregation of US top economists of all colors”. That would be granting a basic income as a right of existence to each citizen, in this case for sharing the Earth’s atmosphere; hence the right to live in a clean, climate change-free version of it – at least while there are anthropogenic carbon emissions being dispersed into the atmosphere.

The “Economists’ Statement on Carbon Dividends” is written in the form of a short list; short enough to be replicated here:

Global climate change is a serious problem calling for immediate national action. Guided by sound economic principles, we are united in the following policy recommendations.

I. A carbon tax offers the most cost-effective lever to reduce carbon emissions at the scale and speed that is necessary. By correcting a well-known market failure, a carbon tax will send a powerful price signal that harnesses the invisible hand of the marketplace to steer economic actors towards a low-carbon future.

II. A carbon tax should increase every year until emissions reductions goals are met and be revenue neutral to avoid debates over the size of government. A consistently rising carbon price will encourage technological innovation and large-scale infrastructure development. It will also accelerate the diffusion of carbon-efficient goods and services.

III. A sufficiently robust and gradually rising carbon tax will replace the need for various carbon regulations that are less efficient. Substituting a price signal for cumbersome regulations will promote economic growth and provide the regulatory certainty companies need for long-term investment in clean-energy alternatives.

IV. To prevent carbon leakage and to protect U.S. competitiveness, a border carbon adjustment system should be established. This system would enhance the competitiveness of American firms that are more energy-efficient than their global competitors. It would also create an incentive for other nations to adopt similar carbon pricing.

V. To maximize the fairness and political viability of a rising carbon tax, all the revenue should be returned directly to U.S. citizens through equal lump-sum rebates. The majority of American families, including the most vulnerable, will benefit financially by receiving more in “carbon dividends” than they pay in increased energy prices.

It may also be relevant to acknowledge that “economic growth” and “competitiveness of American firms” can be read as central in this statement, which might leave another question mark on whether these top economists and advisers would still support a related policy if it, by any chance, didn’t involve these iconic aspects of modern-day capitalist economy. Also interesting is the reference to “cumbersome regulations”, which should be scrapped, and of the acceleration and “diffusion of carbon-efficient goods and services”. This also sounds reminiscent of a contemporary known driver of orthodox, 21st century economic theory: green growth.

Guy Standing, another long-time defender of the basic income policy, writing from Davos, where the world’s richest discuss money and politics at the highest level, has said that he considers this Economists’ Statement as “a major move toward basic income”, adding that he “even had agreement from Larry Fink on one panel debate.” This could indeed be very relevant, since Fink is one of the richest people alive today and therefore his net contribution to a basic income-like policy is, potentially, very large. Other participants at Davos, such as Martin Wolf from the Financial Times, have expressed more cautious approaches to this radical proposal, having said, “I have not been in favor, but I would not be against it, if it were introduced”. This could arguably be the equivalent of saying if a basic income were introduced, he would not reject the payment, but would not support it, either.

The complete co-signatory list for the Economists’ Statement on Carbon Dividends can be read here.

Article reviewed by Dawn Howard.

Next System Podcast on Carbon Tax

Next System Podcast on Carbon Tax

The Next System Podcast, which states that it “seeks to understand contemporary challenges, interrogate emerging possibilities, and begin imagining the next system”, recently interviewed Jeremiah Lowery and Camila Thorndyke of the Chesapeake Climate Action Network about their “Put a Price on it, D.C.” campaign. This campaign aims to institute a local carbon tax on dirty energy sources and redistribute the money raised largely via regular payments to residents, thus creating a local universal basic income (UBI).

Thorndyke says, “we’ve chosen to go with the most progressive revenue allocation possible”, explaining that, as the tax would mean a rise in energy prices, failing to pass on the money to residents would mean that “we’d be trying to solve the climate crisis off the backs of the poor”. Lowery adds, “increasing inequality actually leads to more devastation and more climate change.

Edited by: Caroline Pearce

Next System Podcast on Carbon Tax

Next System Podcast on Carbon Tax

The Next System Podcast, which states that it “seeks to understand contemporary challenges, interrogate emerging possibilities, and begin imagining the next system”, recently interviewed Jeremiah Lowery and Camila Thorndyke of the Chesapeake Climate Action Network about their “Put a Price on it, D.C.” campaign. This campaign aims to institute a local carbon tax on dirty energy sources and redistribute the money raised largely via regular payments to residents, thus creating a local universal basic income (UBI).

Thorndyke says, “we’ve chosen to go with the most progressive revenue allocation possible”, explaining that, as the tax would mean a rise in energy prices, failing to pass on the money to residents would mean that “we’d be trying to solve the climate crisis off the backs of the poor”. Lowery adds, “increasing inequality actually leads to more devastation and more climate change”.

The podcast can be accessed here.

 

More information at:

The Next System Project webpage

The Next System Podcast “Episode 3: Carbon tax & Social Dividends w/ Jeremiah Lowery & Camila Thorndike” information and transcript

 

Edited by: Caroline Pearce

UNITED STATES: Carbon tax new report identifies possibilities for implementation in eight US states

UNITED STATES: Carbon tax new report identifies possibilities for implementation in eight US states

The United States Carbon Tax Center (CTC) has just released a new report, showing that eight USA states are ready to implement a carbon tax, and twelve others are building towards it. This comes in a time when the Trump Administration unwinds recent progresses related to climate change policy in the USA.

The CTC has prepared a toolkit, designed to help advocates for carbon taxes win support in their respective states. CTC’s director Charles Komanoff sets the tone of urgency: “now we need to get it to as many people as possible in the states where we have the greatest chance of victory, and fast”.

The report examines the economic, political and environmental situation in all 50 USA states, in an attempt to determine the regions where the best possibilities are to enable policies that can dramatically reduce carbon emissions. In the report and elsewhere, serious consideration is being given to turn this carbon tax revenue into a social dividend, or a kind of basic income.

Already in the Canadian province of British Columbia a carbon tax policy is in place since 2008, and has been very successful at cutting carbon emissions. According to another CTC report, released in 2015, the British Columbia region has seen per capita carbon emissions decrease 3.5 times faster than the rest of Canada, while still growing in an economic sense. Based on this successful implementation, Prime Minister Justin Trudeau progressive government is determined to take carbon taxation onto the national level. In October 16th 2016, Trudeau boldly told MPs in the Canadian House of Commons (as reported in the CPC website) : “If neither price nor cap and trade is in place by 2018, the government of Canada will implement a price in that jurisdiction”. The idea is to start at 10 CAN$/tonne CO2 in 2018, gradually increasing up to 50 CAN$/tonne CO2 in 2022.

 

More information at:

 

Courtnet Weaver, Barney Jopson and Ed Crooks, “Trump unwinds Obama actions on climate change”, Financial Times, March 28th 2017

 

Yoram Bauman and Charles Komanoff, “Opportunities for carbon taxes at the state level”, Carbon Tax Center, April 2017