Tax policy can help with the drive to net zero. Carbon pricing, in particular, can be effective tool, but for it to be more effective, there needs be international consensus on its application or, at the very least, it needs to be adopted by high emitting countries. Other policy options include tax incentives, stricter regulation, subsidies and public investment. In this period of transition, getting to net zero could have a negative impact on tax revenues. Ambitious carbon pricing can lead to high energy prices and an increase in the cost of goods and services. Policymakers will need to weigh up the multiple and often conflicting policy considerations, and they will need to work together – across sectors and nations – if they are to be successful.
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Tax policy can help with the drive to net zero. Carbon pricing, in particular, can be effective tool, but for it to be more effective, there needs be international consensus on its application or, at the very least, it needs to be adopted by high emitting countries. Other policy options include tax incentives, stricter regulation, subsidies and public investment. In this period of transition, getting to net zero could have a negative impact on tax revenues. Ambitious carbon pricing can lead to high energy prices and an increase in the cost of goods and services. Policymakers will need to weigh up the multiple and often conflicting policy considerations, and they will need to work together – across sectors and nations – if they are to be successful.
If you are not a subscriber, subscribe now to read this content.
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