Can Taxes Improve our Health and our Planet?

 

What do Big Gulp drinks and Hummers have in common? Apart from being oversized, one might think, not very much. But to economists, both goods are examples of a negative externality -- giving joy to people who use them, but imposing public health, and environmental costs on the rest of society.

One way to tackle these negative externalities is through a Pigouvian Tax -- raising the price of consuming, or of producing goods that have these negative externalities. In this episode of EconoFact Explains, we explore the principles of Pigouvian Taxes as they apply to carbon emissions, and sugary drinks. We also highlight economic arguments regarding whether such taxes are regressive and ineffective, alongside arguments that they lead to a healthier and fairer society.

 

Related:

 

Memos:

• Should Governments Tax Sugary Drinks?
• Can a Carbon Tax Cut Emissions Without Hurting the Poor?

Podcasts:

• The Carbon Tax: A Green Thumb on the Invisible Hand