Carbon markets and carbon tax - the two can work together
14th May 2007
A letter to the editor of the FT today points out the unnecessary dichotomy which many people perceive between markets and carbon taxing when attempting to fight climate change.
Sandy Nicolson of KPMG makes two points about how these two vehicles should work together to solve the problem:
“our systems of taxation have to be in synch with the form and aims of the carbon markets….For example, there is debate on whether the profit and losses on these trades under the ETS, Kyoto, and the voluntary market should be treated as capital or revenue.”
“there is a real danger that in a rush to invest we in developing country abatement projects we forget some of the tax lessons that we have learnt from similar inbound investment projects into countries such as India and China.”
Nicolson also says to note “what local tax costs (they may) occur when they try to expatriate the profits on these investments.”
