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Fuel taxes don't hurt the world's poor - they don't have cars

Only bad for poor people in rich countries

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People with lots of cash in their pockets are much harder hit by a hike in petrol taxes then those living in poorer countries, a professor of environmental economics and his team of international researchers have argued.

Prof Thomas Sterner at the University of Gothenburg said the reason for his claim is simple: people living in poorer nations have much less access to cars because such vehicles are considered a luxury item.

“Petrol taxes are effective and actually don’t affect poor people disproportionally. Powerful lobbyists have tried to undermine the whole idea of petrol taxes, claiming that the effects are too hard on the poor.

"Our results contradict this view, especially with respect to developing countries,” said Sterner, who is lead author of the UN climate panel's working group dubbed the Mitigation of Climate Change.

His army of 35 researchers from 25 different countries claim in a new book - Fuel Taxes and the Poor, the Distributional Effects of Gasoline Taxation and their Implications for Climate Policy - that increasing taxation on petrol had proved an effective instrument in reducing greenhouse gas emissions.

“The reason why the global climate negotiations are so slow has to do with global justice. Poor nations have not caused climate change and they want to be compensated rather than being forced to pay for adaptation and mitigation; they want their share of the atmospheric commons," Sterner said.

"Our research shows however, that increased fuel taxes are not, per se, incompatible with sustainable growth, reduced poverty and an improved climate,” he added.

The researchers did note that poor people living in high-income countries such as the US could be affected by petrol taxes. But the study concluded that middle- and high-income earners would be "hit harder" by petrol tax increases.

They said: "India, China and many African countries are examples, where cars and fuels are luxury products. In many European countries such as Sweden the petrol tax is roughly neutral."

The report also claimed, without citing the source of its figures, that around "25 per cent of the global emissions of fossil CO2 can be traced to the transport sector, and this share has increased in recent years. In the EU it has grown from 20 to 30 per cent in the last 20 years."

Sterner reckoned that the research showed that pushing up petrol taxation "reduces emissions of greenhouse gases from the transport sector". He added that it also "exemplified" what he described as "justice aspects".

In other words, poorer nations are compensated for all that nasty pollution our gas-chugging cars are pushing into the atmosphere. ®

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