More than 70 economists have launched a plea for an economy-wide, uniform carbon tax (CO2-tax). These economists argue that the draft climate agreement will lead to unnecessarily high costs. Furthermore, there is a reasonable chance that the goals that have been set will not be met. The Dutch politicians justly focus on the affordability of the energy transition, and for that very reason an effective and efficient approach is necessary. According to the economists that drafted and signed the plea, the Netherlands should be the first to impose a tax on CO2, of 50 euros per tonne of emissions, and they should subsequently promote this tax on the international level. Among other, six professors of Erasmus School of Economics have signed the statement.
The plea has been drafted on the initiative of, inter alia, Sijbren Cnossen Professor of Public Economics at Erasmus School of Economics Bas Jacobs. Professor Bas Jacobs calls for the introducton of the CO2-tax as quickly as possible. An implication of the tax is that the price of CO2-emission will be the same for everybody: for all firms, all industries and even for all households. As such, the price effect of the tax is that the polluter will pay for his or her emission. The result is then that the entities which can reduce their emission at the lowest cost will do so. Furthermore, new techniques will be developed for the reduction of CO2-emission and, eventually, this will influence the choice behaviour of firms and households in such a way as to reduce their CO2-emission.
The call comes at a politically exciting moment. Left-wing green party GroenLinks says it will not support the government’s climate plans unless ministers introduce a national carbon dioxide tax for industry. However, the plan of the economists is different than the plan of Groenlinks, because the economists want to give the revenues of the tax back to society in the form of subsidies for clean technologies. Furthermore, the economists want to prevent that firms, on average, need to pay more taxes. This is because higher taxes will give firms an incentive to move their production facilities, and that is undesirable.
Signatories of Erasmus School of Economics are:
- Sijbren Cnossen
- Robert Dur
- Aart Gerritsen
- Bas Jacobs
- Jan van Ours
- Jarig van Sinderen
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Read the entire article (in Dutch) on ESB, 25 January
Listen to the entire interview with Bas Jacobs (in Dutch) on NPO Radio 1, 26 January