Research and policymakers widely agree that a carbon tax is one of the most effective tools for mitigating climate change, but it can exacerbate inequalities as low-income households spend a larger share of their income on goods that are subject to such a carbon tax.
Carbon taxes are unequally felt
Research and policymakers widely agree that a carbon tax is one of the most effective tools for mitigating climate change, but it can exacerbate inequalities as low-income households spend a larger share of their income on goods that are subject to such a carbon tax.
Nº 59
- Climate & Atmosphere
- Industry Emission Reduction
- Pricing Carbon
Carbon taxes are unequally felt
The carbon tax in France hits low-income households the hardest, as they pay the highest amount of tax relative to their income, exacerbating inequalities and increasing fuel poverty. In 2018, the announcement of the fuel tax led to social unrest and the emergence of the gilets jaunes protest movement.
Berry, A. (2019). The distributional effects of a carbon tax and its impact on fuel poverty: A microsimulation study in the French context. Energy Policy, 124, 81-94. https://doi.org/10.1016/j.enpol.2018.09.021
Willsher, K. (2018). Macron scraps fuel tax rise in face of gilets jaunes protests. the Guardian. Available at https://www.theguardian.com/world/2018/dec/05/france-wealth-tax-changes-gilets-jaunes-protests-president-macron
Fremstad, A., & Paul, M. (2019). The impact of a carbon tax on inequality. Ecological Economics, 163, 88-97. https://doi.org/10.1016/j.ecolecon.2019.04.016
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