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In order to reduce the harmful affects of recession and carbon emissions, the goverment provided tax incentives for manufacturing firm's to acquire energy efficient production technologies and provide an alternative, more efficient methods of combining inputs to produce output.
Carbon Tax Basics
- A carbon tax requires emitters to pay a certain amount for each tonne of greenhouse gas emissions they produce.
- Businesses and households will take actions to minimize their emissions in order to avoid paying the fee, such as switching fuel sources or implementing new technology.
- A carbon tax varies from a cap-and-trade system in that it offers more clarity regarding costs but not on the amount of emission reduction to be accomplished.
- There are two main types of taxes on greenhouse gases: emissions taxes, which are based on how much an entity generates; and taxes on goods or services, such as a carbon tax on fuel, which are often greenhouse gas-intensive.
To learn more about Carbon tax basics refer to:
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