The war on Climate Change is raging and efforts to address its impacts are being pursued.
The measures put in place to combat these impacts can only work if an intricate balance between workable policies and intentional action is achieved. One of the ways which can be used to address climate change contributors such as carbon emissions and traffic congestion is the use of fiscal instruments.
Fiscal instruments are monetary tools that use market mechanisms and work through setting up of prices to achieve certain government agenda.
Regarding easing traffic congestion and carbon emissions, some of the instruments that the government may employ include imposing taxes and subsidies such as toll tax, emission or pollution tax, clean fuel subsidies and electric vehicle subsidies.
They are financial tools that may be used to correct negative externalities in the transport sector and encourage positive attitudes. This may take the form of reducing traffic flow in urban areas by discouraging private vehicles use and in turn encouraging public transportation uptake.
Additionally, they can also be used to embrace emerging technologies and avenues to promote decreased carbon emissions such as electric mobility and non-motorized transport as well as adoption of clean energy fuel.
Developed nations such as the Netherlands, Norway, United Kingdom and Germany have adopted the use of fiscal instruments through policy to address transport emissions of carbon dioxide by increasing tax burdens for vehicles with high emissions while providing tax benefits for vehicles with low emissions.
Although the subsidies and the taxes vary from country to country, it is a step in the right direction towards addressing vehicular emissions and promoting clean energy modes of transportation.
Fiscal instruments can be used in a number of ways. Firstly, ensuring tax benefits are offered at the point of purchase for low emission vehicles; this will act as an incentive to buyers and serves to lower the cost of low emission vehicles.
Secondly, ensuring continued tax benefits for low emission vehicles during their use. An example of this can take the form of reducing costs for consuming electricity as compared to higher taxes and total price at the pump; this will serve as an incentive for consumers to opt for electric vehicles.
Thirdly, adopting a balanced, regularly readjusted and self-sustaining tax system for vehicle related taxes. This will ensure that high emission vehicles generate enough tax revenue to provide tax breaks for low emission vehicles.
The use of fiscal instruments, particularly those that tend to enforce positive attitudes, such as electric vehicles subsidies and tax breaks for environmentally forward transport means, have shown much promise in promoting an environment-friendly and sustainable future.
Although we are not yet close to reversing climate change impacts, adopting workable solutions is one weapon that can go a long way to winning the battle in the war.
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Note: The results are not exact but very close to the actual.
