The head of the Organisation for Economic Cooperation and Development (OECD) Angel Gurria has called on countries to impose a “big fat tax” on carbon dioxide emission.
The world’s leading economic agency says such a tax is needed as part of the race to stop climate change.
Fairfax Media reports that speaking at the World Cities Summit in Singapore, the OECD Secretary-General said the available evidence showed the world would need to cut fossil fuel emissions to zero in the second in the half of the century to ensure global warming does not rise above two degrees Celsius, the international agreed goal.
Mr Gurría, an economist from Mexico, said that could be done cost-effectively with carbon pricing measures such as a carbon tax or an Emissions Trading scheme (ETS).
In Australia, the conservative Liberal-National government is attempting to repeal carbon price legislation that was put in place by the previous Labor government.
Fairfax Media reports Mr Gurria said he had formed the view that emissions trading schemes, which sets the carbon price by allowing companies to trade a capped number of pollution permits, did not work as easily or as quickly as carbon taxes, which is a set price put on releasing greenhouse gases.
He said politicians did not like carbon taxes and preferred emissions trading because they did not like the term ”tax”.
”I say just put a big fat tax on carbon. It will be a lot easier,” Mr Gurría said.
Fairfax Media reports he said generally countries were moving to reduce taxes on companies and labour to encourage economic growth and jobs.
He said the loss of revenue from this could be compensated with consumption, property and green taxes.
Australia’s carbon price, introduced in 2012, has a flat rate for the first three years, after which it will revert to a market based ETS, linked to the European Union’s ETS.
The Liberal-National government promised to abolish the system and replace it with its own Direct Action plan, under which some companies and farmers would be paid by taxpayers to cut emissions.
Countries have agreed to negotiate a new global climate treaty through the United Nations by a meeting in Paris late next year, which would come into effect from 2020.
Fairfax Media reports Mr Gurría also said countries should stop encouraging the use of fossil fuels through subsidies.
He said the subsidies were wasteful, environmentally damaging and economically regressive because they benefited those who needed them the least.
