EXCHANGE Volume 02, No. 1, 2024, pp. 103-108
Carbon Tax Development in the EU in the Context of Carbon Neutrality
Abstract: Facing the climate change crisis, the carbon tax is internationally recognized as one of the most effective market-based policy instruments to reduce greenhouse gas emissions. It is significant for the European Union to explore how to structure a uniform carbon tax system to achieve the objective of “carbon neutrality”. Its primary function is to internalize the external environmental costs so that fossil energy consumers can consider the environmental costs in their decisions. This paper reviews the existing carbon tax policy, identifies the necessity of imposing a carbon tax based on the public goods theory and the polluter pays principle, further determines that the tax should be calculated based on fossil fuel consumption and carbon content, clarifies the rationality of imposing the tax at the consumption end, To be more equitable and to avoid a disconnect between tax capacity and tax burden, a more moderate taxation approach is proposed for progressive rates of carbon taxation. A reasonable policy proposal for the EU to achieve the objective of “carbon neutrality”.
Keywords: Carbon neutrality; carbon tax; climate change; environmental costs; super progressive tax rate.