(ii) for fuel: differential fuel taxation, high fuel taxes; and
(iii) for traffic: congestion charges, parking charges, subsidies for less polluting modes.
Except for emissions fees which attempt to attack environmental intrusion directly, the
others are indirect instruments that affect vehicle use or associated inputs. In reality, however,
even though emissions charges are a direct instrument and attempt to put an appropriate price
on users for the use of the environment, there can be said to be at best a fine dividing line
between a user charge and a tax (see Bell, 1995).
Three among the above list could be imagined as possible candidates for a global tax.
They are: (1) emissions charges or Pigouvian taxes on international airlines and shipping
companies; (2) tradable permits that would apply across nations within limits set by them;
and (3) a global carbon tax. Their usefulness as global levies is examined below. The carbon
tax is specially treated since it has been discussed in some detail in the global context and
since it seems to offer a not totally infeasible option in terms of its introduction and
implementation as a global tax.
1. A Pigouvian global tax on airlines and shipping
A Pigouvian tax attempts to internalise the true value of the environment in product
prices. Take traffic: without internalization of external costs, traffic would be produced at
greater than optimal levels. In Diagram 4, Q would be produced, reflecting maximisation of
net private benefit (marginal schedule MNPB) while ignoring external costs (marginal
schedule MEC). A Pigouvian tax t imposed by the authorities would make traffic "producers"
to treat (MNPB-t) as their new decision making parameter, with the effects of: (1) producing
less traffic Q*; and (2) generating tax revenue CAQ*D. This could be achieved through t,
a Pigouvian tax or charge.
If this could be made applicable to all international airlines, the tax would become a
global tax candidate. First, it would not be impossible to design it for all states and would
have the impact of reducing noise and air pollution. Second, on the assumption that the
world’s poor do not fly internationally very often, the tax could be expected to be quite
11