As society transitions towards a carbon-free environment, the financial burden on taxpayers increases. This is especially significant for low-income individuals who may be disproportionately impacted by rising fuel prices and other climate action costs. Professor Matti Liski suggests that progressive income taxation could be used to equalize these costs among different income categories.
Liski emphasizes the role of income taxation and income transfers in addressing economic disparities in climate policy. He proposes integrating income transfers that offset climate action costs into overall taxation processes. This approach involves recording emission-related expenditures on tax returns and providing refunds to low-income earners while imposing higher costs on high-income individuals.
The goal of this strategy is to promote environmental consciousness among wealthier individuals and encourage energy-efficient choices. Liski acknowledges the complexities of implementing his proposal, anticipating potential drawbacks like discouraging work due to high tax burdens. Nevertheless, he underscores the importance of balancing costs associated with climate change and fostering an environmentally sustainable society.
By leveraging income-based refunds and tax adjustments, Liski seeks to mobilize resources effectively and boost eco-friendly initiatives. This inclusive strategy aims to engage citizens from all income brackets in climate action and reshape consumption patterns for a greener future.
