A Proposition for a Multilateral Carbon Tax Treaty by Falcão Tatiana;

Author:Falcão, Tatiana;
Language: eng
Format: epub
Publisher: IBFD Publications USA, Incorporated
Published: 2019-08-15T00:00:00+00:00

6.11. Conclusion

This chapter started by using scientific evidence to explain why, out of the array of polluting elements that could be subject to tax, only carbon would be targeted under the proposed MCTT. The scientific background was necessary to establish the causal link between the application of the tax to the element of pollution and the environmental effectiveness (i.e. CO2 reduction). This effect may only be obtained by imposing a tax on the right element of pollution.

Defining the item subject to tax will be especially significant for the development of the chapter 7, which will explore the proposed tax base and the tax rate(s) for developed and developing countries. Whereas the scientific discussion is devoid of legal substance, it is relevant to the extent that a law can only operate with regard to human relations and their interaction with the environment. The objective of this book is to control and reduce human interference with the environment, particularly with regard to carbon dioxide emissions. A measure to that effect can only operate if both the natural and legal sciences are known so that they may interact to produce the expected behaviour and result together.

This chapter established that a carbon tax is to apply to the carbon built into standard fossil fuels, i.e. oil, gas and coal. Carbon is to be taxed at an upstream level, upon the exploitation of the natural resource, so that the entire production chain is affected by the price increase. Carbon dioxide emissions operating upstream, midstream and downstream would thus be reached equitably. All losses perchance computed along the production chain are to be accounted for by the upstream tax.

The taxpayer is the person operating the exploitative business. That comes as a result of the characteristics of the oil, gas and coal industries, with attention on the need to keep the tax imposition as manageable as possible in order for it to be of easy application by developed and developing countries.

Temporary secondary and tertiary carbon tax allocation rights were also created with a dual purpose: (i) to capture the carbon present in fossil fuels deriving from non-ratifying countries; and (ii) as a form of stimulus for extracting countries to adhere to the proposed multilateral regime. Secondary and tertiary allocation rights would only be triggered in the case that the primary right of taxation (by the country where the exploitative industry is located) is not exerted or is renounced. In that case, the carbon tax would apply at either the refinery level 523 (secondary) or upon importation into the country of consumption (in the form of a border tax adjustment, i.e. a tertiary adjustment). Coal was said to have only a default and a tertiary adjustment upon importation into the country of consumption. Secondary and tertiary allocation rights should ideally only apply while the proposed MCTT is in implementation phase and is not yet widely accepted by the international community. It should be phased out over time, provided that the proposed MCTT gains international acceptance.

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