The COP29 climate talks in Azerbaijan aim to agree on an annual financial target of $1 trillion or more per year to help poor countries deal with global warming. Some see new taxes as one way to get there.
The Global Solidarity Levies Task Force (GSLT), led by France, Barbados and Kenya, is looking into the matter. Below are excerpts from its latest report on the options being discussed and estimates of how much could be raised.
Shipping
The closest thing to an agreed tax is on ships, which account for about 3% of global emissions, and governments will discuss a series of measures at a meeting of the International Maritime Organization in April.
Tax models include a proposal for the Pacific and Caribbean islands for a flat rate of $150 per tonne of carbon dioxide equivalent (CO2e), rising every five years, GSLT said.
The European Union and Japan favor tariffs of $100 a tonne by 2027, while countries including the Bahamas and Liberia have proposed an initial flat rate of around $18.75 a tonne.
A levy ranging from $150 to $300 per ton could generate $127 billion annually in 2027-2030, GSLT said, citing a UN Trade and Development study. Revenue will drop to $103 billion in 2031-2040 and $36 billion in 2041-2050 as ships become less polluting.
Airplane
Aviation accounts for 2% of global emissions but generally has no value-added tax (VAT) or sales taxes. The levies being discussed by the GSLT include kerosene fuel, private jet fuel, luxury tickets and frequent flyers, which together generate $19 billion to $164 billion a year, it estimates.
About 29 countries already tax jet fuel through excise duties, carbon taxes or emission permits. The average price among G20 countries in 2021 was 9 euros ($9.50) per ton.
Broad tax barriers include ensuring a level playing field for industry players and overcoming legal hurdles.
At least 21 countries also already have some form of tax on air tickets, with prices ranging from €2 in Portugal to around €500 for some flights from Britain, GSLT said.
Fossil fuels
Countries already tax fossil fuels, including indirectly when the fuel is purchased at the pump, through VAT, carbon taxes, or emissions trading schemes, or through fees or taxes on oil companies.
GSLT said revenue could be generated in the future through an output tax or “cash” on the power company’s profit tax.
A “Climate Damage Tax” of $5 per tonne released by 2024 would generate an estimated $216 billion, a Greenpeace report said this year.
ActionAid’s report said a tax of 50% of the profits achieved by the 14 largest oil companies by market value in the two years to July 2023 would have brought in about 173 billion.
Financial transactions
More than 30 countries have some form of tax on transactions including Britain, France, Italy, and Spain although agreeing on a cross-border tax has been difficult.
The Austrian Institute of Economic Research estimates a 0.1% tax on trading stocks and bonds and a 0.01% rate on global derivatives trading would raise $238 billion to $419 billion a year.
Carbon
GSLT says there are currently 75 carbon pricing mechanisms in 83 jurisdictions, of which 36 are classified as emissions trading schemes (ETS) and 39 as carbon taxes. In total, they cover 24% of global emissions.
But most are cheaper than the $40 to $80 a ton needed to keep the world on track to control global warming, due to political concerns about the impact on homes and businesses.
The plan proposed by the International Monetary Fund would see countries agree on a minimum price of $50 per ton, or $25, $50, and $75 per ton that vary by country’s stage of development.
GSLT said another option would be to link existing trading schemes.
Treasure
The Group of 20 major economies this year debated whether to raise taxes on the super-rich.
A report backed by the current G20 leader in Brazil proposed a global minimum tax of 2% of the wealth of the world’s nearly 3,000 billionaires, to raise about 250 billion a year.
Other options may include changing the threshold at which the tax starts and the rate at which it is applied.
Crypto
Cryptocurrencies like bitcoin are created by computing power driven by the use of power to create emissions.
In 2022, Kazakhstan moved to charge crypto miners between 1 and 25 Tenge ($0.002 to $0.056) per kilowatt-hour, GSLT said. A global electricity consumption tax of $0.045 per kWh could raise $5.2 billion, the IMF estimated.
A levy on crypto trading at 0.1% could raise $15.8 billion while a capital gains tax of 20% could raise $323 billion, IMF research shows.
Plastic
Countries are expected to meet in South Korea next week to agree on an agreement to strengthen plastic pollution, Ghana and others want to be taxed on producers of plastic polymers.
A fee of $60 to $90 per ton on primary polymer production could raise $25 billion to $35 billion a year, GSLT said, citing analysis from the Australian non-profit Minderoo Foundation.
($1 = 0.9473 euro)
—By Simon Jessop, Reuters
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