PUBLISHED OCT 10, 2019

What a Carbon Tax Could Mean for Your Wallet

Carbon tax = a fee a gov charges businesses for burning fossil fuels. The International Monetary Fund (IMF) is a big fan — and says it’s the best way to fight climate change. Others aren’t sold on the benefits. Here's how a carbon tax could affect your wallet.

Your utility bills could take up more space in your budget. A carbon tax makes household utilities (think: gas, power, and heating) more expensive to produce. Meaning you'll pay more to turn on the lights and adjust the thermostat. The IMF predicts a carbon tax of $75 per ton would make US household electricity bills jump 53% in the next decade.

But you miiight get some of that money back. The Congressional Budget Office guesstimates that carbon pricing measures could raise $1.2 trillion by 2030. TBD how generous the US gov would be with carbon tax revenue. But countries like Canada have put some of it back into citizens’ pockets by cutting other taxes and giving rebates. 

Your money could get greener. If companies could save money by being eco-friendly, they’ll probably be more likely to try. That push for innovation could give the economy a boost. Swedish GDP has grown by nearly 60% since they intro’d a carbon tax. In part because they got serious about renewable energy. But critics worry a carbon tax would cost companies more without any larger payoff. 

theSkimm: The US doesn't have to enact a carbon tax just because the IMF suggests it. And the impact depends a lot on how the gov chooses to use the cash money it would make. While you wait for an update, look for little ways to save money while saving the Earth. Like taking shorter showers and unplugging stuff you aren’t using. Little sacrifices, big rewards. 

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