The First Carbon Tax was Introduced in Finland in 1990

A carbon tax is a tax on energy sources that emit carbon. Carbon is present in coal, petroleum, and natural gas and converted to carbon dioxide and other products when combusted. In contrast, wind, sunlight, geothermal, hydropower and nuclear are non-combustion energy sources and do not convert hydrocarbons to CO.

The objective of a carbon tax is to reduce carbon dioxide emissions, slow climate change, and improve the health of both the planet and people. Scientists believe that human-induced greenhouse gas emissions (currently 27 billion tonnes of carbon dioxides pa) are the primary cause of global warming. In 1979, economist Milton Friedman said ‘the best way to deal with pollution is to impose a tax on the cost of the pollutants emitted by a car and make an incentive for car manufacturers and for consumers to keep down the amount of pollution’.

Finland was the first country in the world to introduce a CO2 tax in 1990. Subsequently, many countries have followed suit and introduced their own versions of a carbon tax. Carbon taxes are generally a work in progress and subject to constant changes and revisions.

In 2012 the Australian Federal government introduced a carbon price of AUD$23 per tonne of emitted CO2 on selected fossil fuels consumed by major industrial emitters and government bodies. This cut Australia’s annual carbon emissions by 17 million tonnes and produced the biggest annual reduction in greenhouse gas emissions in 24 years. On 17 July 2014, the Abbott Government passed repeal legislation through the Senate, and Australia became the first nation to abolish a carbon tax.

Taxpayers can simply reduce the carbon taxes they pay by reducing their consumption of coal, petroleum, and natural gas.