Carbon taxes have been around for a while, but their spread into the general population and business world has been fairly slow. Corporations like manufacturers have dealt with carbon taxes for years, and smaller businesses and individuals are gradually joining the world of carbon taxes and credits. For those who haven't had to pay them before, they can seem confusing at first, but they're not really that difficult to understand.
Simple Financial Consequences
The concept behind carbon taxes is very simple. Carbon use or generation (the tax can be applied to both) requires the payment of an extra tax, so the more carbon used or produced, the more tax a company or person would pay. Someone who has to pay a tax when they use carbon, such as an added tax at the gas pump, might drive less in order to use less gas and avoid paying more in taxes. The point is to reduce the pollution produced. A manufacturer who produces a lot of pollution may look for alternatives if carbon taxes increase on the fuel that the manufacturer uses.
Incentives to Switch Power Sources
Carbon taxes have two goals. One is to reduce pollution quickly through immediate reductions in fuel use, and the other is to give people and companies incentives to switch to more sustainable and less polluting fuels. For example, someone who has to pay a carbon tax on gas for their car may take the bus more or walk more. A company that has to pay a carbon tax on oil use to make their products may look for another way to make the parts it needs, using materials that don't result in as much pollution being released into the environment.
Credits and Rebates Allow Flexibility
At times, the use of a polluting fuel is a necessity. For example, a rural community where residents have to commute long distances to work (and who can't afford to move closer to the city they work in) could be hit hard by a gas carbon tax. Municipalities and states can offer rebates to people in these situations. Companies can also buy carbon credits and offsets to counter their production of more pollution during manufacturing or the creation of more pollution when their staff members have to take a lot of plane trips, for example. These allow for a little more flexibility that prevents smaller organizations and individuals from being financially burdened by the tax when they have not yet been able to reduce their use of the taxed fuel.
Carbon taxes have an effect. Their flexibility (when credits are taken into account) makes them a very easy tool in the push to get people to use alternative fuels.
For more information on carbon tax benefits, contact your local government.