Saturday, March 15, 2008

Any number of economists have been arguing recently that while no-tax is better than some-tax,  a "revenue neutral" carbon tax is however still better than the bureaucratic "cap and trade" regulatory mess most governments would rather introduce instead.  (There's even one or two who suggest a rather special kind of carbon tax be introduced).

One recent argument for a "revenue neutral" carbon tax was put forward by John Humphreys of Australia's Center for Independent Studies (CIS), before being comprehensively dismantled by fellow Australian Gerard Jackson.  Humphreys argues a Carbon Tax would be less harmful to the country than Emissions Trading -- that it would be “more efficient, effective, simple, flexible and transparent.”  Rubbish, says Jackson.  Any carbon tax or carbon regulation would mean lower productive capacity. "A carbon tax," he says, "is a direct tax on capital and hence Australia’s capital structure and the process of capital accumulation..."

Prodos has a summary (with links) of both positions, and Humphreys engages with Prodos in the comments.

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Anonymous John Humphreys said...

Jackson did not dismantle anything. He doesn't understand the first thing about economics. The extremely simple fact that he is totally unable to understand is that ALL tax hurts the economy. So swapping one tax for another will give an ambiguous result, depending on the details.

He has lost all credibility.

6/12/2009 03:27:00 pm  

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