Richard Tol’s latest discussion paper looks at carbon taxes and wonders just how much you get by way of emissions reduction if you stipulate that you are not going to increase the overall tax take.
In some countries the answer is not very much – if your current tax take is low then you can only impose a small carbon tax. If you try to impose a higher tax in these countries, they will (theoretically at least) drop out and their emissions will remain “out of reach”.
