[] Why Do We Need Carbon Tax?
If global warming progresses at the current rate, then by year 2100, the temperature of the earth will rise by as much as 5.8 degrees, causing natural disasters such as floods and droughts which will destroy the living conditions for mankind.

In order to prevent global warming, greenhouse gases such as CO2(carbon dioxide) must be reduced. In the short term, Japan must meet its goals for the Kyoto Protocol in reducing greenhouse gas emissions by 6% between 2008 and 2012 in reference to the base year 1990. (For HFCs, PFCs, and SF6s the base year is 1995.) Further cuts in CO2 emission must take place in the long term.

However, Japan has neither abided by the Protocol adequately nor issued policies which sufficiently address global warming; this situation calls for an immediate and effective governmental action to meet the goals of the Kyoto Protocol.

[] What is Carbon Tax?
Carbon tax is a kind of environmental tax which is imposed on the consumption of fossil fuels, such as coal, oil, and natural gases, the carbon content in each of which determines the tax rate. This raises the prices of such fuels (and products/services that are produced with their consumption accordingly), resulting in a decrease in demand, and a reduction in the emission of CO2. It is a fair system, by which those who have contributed to the reduction of CO2 emission will gain, and those who have not will bear the weight.

[] The Effects of Carbon Tax
Supposing that this year a carbon tax of \6,000 per ton of carbon were introduced, one may expect CO2 emissions to be reduced by 7 million carbon tons by year 2010. This is equivalent to at least 2% of the amount of greenhouse gas emission in Japan in year 1990, which is set as the base year for the Kyoto Protocol. Furthermore, by combining carbon tax with the following measures, a synergy effect of an even greater reduction can be expected.

1) Implementing a tax relief plan that lightens the tax burden for companies putting effort into the reduction of CO2 discharge.
2) Re-routing the budget currently being used mainly for road or airport construction to fund global warming prevention measures.

[] Other Merits of Carbon Tax
1) An opportunity to rethink the environment
Because carbon tax is cast based on the carbon content of different fossil fuels, it will create a price difference between products, depending on the involvement of fossil fuel in each of their production process or materials. Thus, a consumer, in his/her economic decision-making, will naturally become more aware of the environmental consequences of his/her choices, measures to prevent global warming, and the need to modify his/her actions accordingly.

2) Energy-saving by households
Consumers will be motivated to reduce fuel or electric costs by not using automobiles or electric appliances unnecessarily, while preferring energy-efficient products that use less fossil fuels.

3) Energy-saving by companies
Companies will be motivated to reduce the cost of their energy-related activities, by adopting energy-efficient methods/ machines/ materials for the production process.

[] Movements in Japan and Abroad
Many EU member nations have combined the aforementioned carbon tax with energy tax (levied depending on the amount of electricity/energy used). Today, Finland, the Netherlands, Sweden, Norway, Denmark, Germany, Italy, and Britain possess either a carbon tax or energy tax scheme. In Japan, the Ministry of the Environment has recently taken the initiative, researching on the various forms of environmental taxation, including carbon tax. Although the introduction of carbon tax is on the political agenda, an immediate action is desired, considering the time-sensitiveness of the issue at hand.

[] Features of the Carbon Tax We Propose

While encouraging CO2 discharge reduction, lightening the load on companies by reducing their tax responsibilities.
Carbon tax can encourage the development of firms which produce minimal amounts of CO2 in their production process, products, or services, acting as a catalyst for the revival of Japanese economy and environmental preservation. Some firms that heavily rely on fossil fuels and export, however, may face severe tax burdens in the short term. For these firms, the burden of the tax may be lightened, on condition that they submit beforehand a practical and realistic plan to reduce CO2; this policy will help maintain Japanese companies' competitiveness in the international market, while not pardoning them entirely from their responsibility towards environmental preservation.

Concern for the economy and lifestyles of individuals
The created burden of carbon tax can be reduced by the efforts of firms and individuals to save energy spending. Furthermore, if the tax revenues are distributed as follows, it will benefit not only the economy and employment, but also the individual citizens:

If taxes or social insurance premiums are uniformly reduced on a per-employee basis, a firm can reduce its labor costs, while positively contributing to the battle against global warming.

If existing taxes or premiums are uniformly reduced for all citizens, those whose energy expenditure is low need not be pressured economically, as the burden lies only on those with high expenditure.

[EXAMPLE:]
Considering a carbon tax where \6,000 is charged per 1t of carbon, gasoline and kerosene prices would rise by approximately 4 yen/litre.
[Increase in Burdens] -- The added burden for a three-person family is \6,000 annually(with no car)/ \9000 annually (with a car).
[Decrease in Burdens] -- If each citizen receives a \5,000 relief on existing taxes/premiums, then a three-person family would receive a total discount of￥15,000.
[Total] -- There is no net added burden in the average household.

[] The Revenues from Carbon Tax and their Usage
Considering that the primary purpose of carbon tax is the reduction of CO2 through its price incentives, the usage of tax revenues is only a secondary issue. When it comes to the use of these tax revenues, there are many possibilities, including its utilization as a finance source for the budget for anti-global warming measures, welfare, etc. There must be sufficient discussion on the possible use of tax revenues in the blueprint stage of the introduction of carbon tax.