Taxes and human well-being

He has known to be bold. Now we must hand it to French President Sarkozy. He is among very few world leaders to be brave as well. He has begun advocating for robust carbon tax coupled with rebates or tax reductions.

The tax would be initially based on the market price for carbon dioxide emissions permits, which is now euro17 ($24.74) per ton of carbon dioxide. The government expects to raise euro3 billion, which will be entirely returned to households and businesses through a reduction in other taxes or repaid via a "Green Check”.

This will shift the tax burden from other revenue sources to energy derived from fossil fuels in an effort to discourage their use.Gasoline, diesel fuel, coal and natural gas will be subject to the tax, but not electricity.

France is a charter member of the world's largest carbon cap and trade program, the EU ETS. The ETS (some believe it has done a good job, others don’t) is limited in scope to major emitters of carbon such as power plants and industrial facilities. By applying a carbon tax to home heating fuels and transportation fuels, France can price carbon comprehensively across the economy. Boldly going where others have hesitated.

As though that were not enough to qualify, Sarkozy has gone ahead with the reports of a study and called for a more comprehensive view of economic well-being, one that puts human well-being in driver's seat.

U.S. economist Joseph Stiglitz, winner of the 2001 Nobel economics prize and a critic of free-market economists, who co-authored the report, believes: "GDP is an attempt to measure one part of what is going on in our society which is market production. It is what I call GDP fetichism to think success in that part is success for the economy and for society.”

It was Bhutan that started it all with its adoption of GNH or gross national happiness as against the GDP.

How does one measure something as subjective as happiness? By the number of times one has a hearty laugh? By the number of people seeking redress from stress? Interestingly the state of Iowa has struck a double deal in reducing work days from five to four. Travel hours weekly is reduced, and hence energy saved. And everyone is happy with the end result. Do share your thoughts on carbon taxes and GNH.