Over 30 national jurisdictions around the world have adopted a carbon tax. The tax rate is one of the key aspects of the design of carbon taxes, determining environmental effectiveness,
competitiveness, carbon leakage risks and revenue raised. This article sheds new light on the criteria countries use to set the tax rate in their domestic instruments. To do so, we first outline a taxonomy of criteria that governments can use in setting the tax rate and then provide a comparative analysis of the criteria actually used by 13 jurisdictions to set this rate.
We find that empirically driven criteria, such as marginal abatement cost curves (MACCs) and the social cost of carbon (SCC), are rarely used to determine the tax rate. Few countries use
MACCs to set their carbon tax rate and such use is always combined with other criteria. Overall, carbon tax rates are mostly set based on evaluations that transcend purely empirical estimates. In addition, the Nobel Prize-winning idea of the SCC is not used in any documents published by the countries analysed, despite the fact that it can be adapted to suit political preferences. The common description of carbon taxes as instruments that primarily aim to internalise externalities does not reflect their implementation in practice. A corollary of this finding is that scholarship that criticises carbon taxes for embedding a cost-benefit analysis approach to climate policy simply condemns these instruments for being something they are not. Our analysis also indicates that emulation and competition play an important role in setting the tax rate, as governments copy price levels implemented in other jurisdictions or supranational carbon pricing instruments. This has implications for the design of carbon taxes in the current geopolitical situation, as changes in the tax rate in one jurisdiction may spill over into others.
Goran Dominioni is Assistant Professor in Climate Change Law and Policy at the School of Law and Government at Dublin City University
Citizen participation, in various forms, has long played a part in African societies, with mixed results. In line with recent constitutional/decentralization reforms, Morocco and Kenya have shown political will and institutional commitment to invest more in participation. The chapter analyzes the two countries’ participatory approaches as a political agenda that is closely tied to decentralization politics and therewith to power plays between different stakeholders, including donors. Based on a comparison of the two cases, the chapter examines how the newly introduced spaces enable or disenable citizens to challenge power structures. The chapter finds that, despite positive effects in terms of citizen mobilization and partial accountability, the limited scope and scale of participatory institutions means that the outcomes of the approach are procedural rather than politically transformative. At the same time, the different trajectories of the two countries illustrate the importance of embedding the assessment of each case in the history of participatory practices and local political economy.