Universal basic income – Pros and cons

universal-basic-income-pros-and-cons

A citizen’s income, basic wage or Universal basic Income (UBI) is a concept of paying everyone in society a universal benefit – regardless of income and circumstances. The main advantage is that ensures a minimum standard of income for everyone – without any costs and bureaucracy of means-tested benefits. Also, it avoids the disincentive to …

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The effect of tax cuts

laffer-curve-2018

Lower income tax rates increase the spending power of consumers and can increase aggregate demand, leading to higher economic growth (and possibly inflation). On the supply side, income tax cuts may also increase incentives to work – leading to higher productivity. However, the effect of tax cuts depends on how the tax cut is financed, …

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Top CO2 polluters and highest per capita

co2-emissions-per-capita

The biggest absolute emissions come from China and the United States. In terms of CO2 emissions per capita, China is ranked only ranked 47th, at 7.5 metric tonnes per capita. The US is ranked 11th at 16.5 per capita and amongst countries with sizeable populations, has the highest CO2 emissions per capita. India is the third highest country in terms of absolute emissions, but only 158th in terms of per capita output with 1.7 metric tonnes per capita.

Selected countries CO2 emissions per capita

co2-emissions-per-capita Source: World Bank

What explains variation in CO2 emissions per capita?

  • Levels of GDP. Countries with higher real incomes can afford to use more petrol and industrial production which causes pollution. By comparison, the lowest income countries have very limited industrial production and consumption of oil. However, that is only one factor, for example, the Netherlands has double CO2 emissions than France with similar GDP per capita.
  • Focus of the economy. Economies based on oil  (like Qatar, Bahrain and United Arab Emirates) have the highest levels of CO2 per capita. Qatar has a rate of 45.4 (off the chart) – small population but production based on oil exploration and oil refining.
  • Transport policy. Levels of petrol tax and balance of transport modes can influence CO2 emissions. Countries with highest levels of car use lead to more CO2 emissions. (See: relative petrol prices around the world, e.g. compare US with western Europe)
  • Policies to reduce CO2 emissions. To meet global warming targets countries have adopted policies, such as carbon tax and regulation to reduce pollution.
  • Modes of Power generation. The burning of fossil fuels (e.g. coal-powered electricity stations) is one of biggest causes of CO2 emissions. Countries which gain energy from renewables have lower CO2 emissions per capita.

Changes in CO2 emissions per capita

change-co2-emissions-china-uk

China’s CO2 emissions per capita have more than tripled in past 15 years.

world-co2-emissions-per-capita

Highest Total CO2 emissions by country (kT)

The total level of CO2 emission by kilo Tonne.

1 China 10,291,926
2 United States 5,254,279
3 India 2,238,377
4 Russia 1,705,345
5 Japan 1,214,048
6 Germany 719,883
7 Iran. 649,480
8 Saudi Arabia 601,046
9 Korea, Rep. 587,156
10 Canada 537,193
11 Brazil 529,808
12 South Africa 489,771
13 Mexico 480,270
14 Indonesia 464,176
15 United Kingdom 419,820
16 Australia 361,261
17 Turkey 345,981
18 Italy 320,411

 

Source: World Bank

Lowest CO2 emissions per Capita

By comparison, some of the poorest countries produce practically zero CO2 emissions per capital

Madagascar 0.096
Eritrea 0.089
Niger 0.089
Malawi 0.083
Ethiopia 0.075
Somalia 0.063
Central African Republic 0.061
Rwanda 0.055
Congo, Dem. Rep. 0.049
Mali 0.045
Chad 0.040
Burundi 0.033
Lesotho 0.009

 


Readers Question: Why don’t countries use the carbon tax?

  • Taxes are generally politically unpopular. A tax on carbon emissions will affect the living costs of many people. This can make the government reluctant to impose the tax.
  • There is also the free rider problem. A small country may think – what is the point in introducing carbon tax when their CO2 emissions are dwarfed by other countries like China and the US? Especially, when these bigger countries don’t seem inclined to do too much about the issue.
  • There are also differing opinions about the potential cost of CO2 emissions to the environment. In the US, there is a strong lobby which argues global warming is not scientifically proven. Therefore, there is a resistance to impeded CO2 emissions.
  • Another factor is that there are significant vested interests in the oil industry / other industries which pollute. They fear CO2 tax will reduce their profitability so they are willing to fight against moves to introduce taxes.
  • Another argument used is that a Carbon tax will harm jobs.

Co2 Emissions and global warming

CO2 emissions are widely considered to play a significant role in contributing to global warming.

Global CO2 source: wiki commons
  • Over the past few decades, the level of CO2 in the atmosphere have continued to rise. Scientists say this increase in CO2 has contributed to global warming.
  • Global warming has potentially damaging economic consequences with increased weather variability and loss of biodiversity.
  • At Kyoto, countries made commitments to target lower CO2 emissions, but these targets have rarely been met. At negotiations, countries collectively agreed to reduce their greenhouse gas emissions (which includes Carbon dioxide) by 5.2% on average for the period 2008-2012.

Read moreTop CO2 polluters and highest per capita

Does cutting corporate tax rates increase revenue?

It is argued cutting corporation tax rates can increase total tax revenue. This is because: Lower corporation tax will encourage more multinationals to invest in that country Lower tax rates enable firms to invest more – this leads to higher growth and therefore, higher tax revenues. Lower tax rates reduce the incentive for firms to …

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Polluter pays principle (PPP)

pollution-smog

The polluter pays principle  (PPP) is a basic economic idea that firms or consumers should pay for the cost of the negative externality they create. The polluter pays principle usually refers to environmental costs, but it could be extended to any external cost. In a purely free market, you would only face your private costs. …

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The economic cost of fuel duty freeze

I drive a lot and so am personally affected by fuel duty. The freezing of fuel duty in the past few years has saved me substantial money. But, as an economist I’m dissappointed the chancellor didn’t increase fuel duty. I did get my wish with a new sugar tax – rather unexpectedly, but I was …

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There’s no such thing as a free plastic bag

October 2015 will see England introduce a charge of 5p for plastic bags. Early evidence from Scotland suggests that a tax on plastic bags can lead to a significant fall in demand. Supermarkets in Scotland reported an 80% fall in use of plastic bags a month after the charge was introduced. (Times). A study in …

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Diverted profit tax

Firstly, sorry for the low levels of blogging recently. I am working on a new site, waiting for some outside developers. Secondly I am working on completely new Revision Guides for the new economic syllabus coming out soon. It meant I didn’t do much blogging around the general election – which is perhaps a blessing …

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