A report recently released by the Environment Agency is certain to give further impetus to the debate on environmental taxation. The report, compiled by an expert panel that studies economic methods of implementing environmental policy, says the so-called carbon tax is effective in reducing carbon dioxide emissions, which are primarily responsible for global warming.

The tax, which already exists in some countries, is assessed on levels of carbon dioxide output caused by the consumption of fossil fuels, such as petroleum, natural gas and coal. According to a computer-model study by the panel, a tax of about 1 yen or 2 yen per liter of gasoline, if combined with other measures such as subsidies for emission-rights trading and energy-saving investment, will help reduce emissions significantly. The additional tax revenue is estimated at anywhere between 500 billion yen and 900 billion yen annually. At this rate, says the report, the tax will have only a marginal effect on economic growth, with gross domestic product dipping just 0.3 percent.

The carbon tax is considered an essential to protecting the global environment: It will reduce CO2 emissions, whose greenhouse effects, if left unchecked, are expected to cause disastrous climate changes around the world. The question now is what kind of carbon tax will be most effective in cutting emissions without affecting economic growth. The report provides a good basis for more specific discussions on this subject.