How will carbon taxes be administered?
The tax will be levied in the wholesale branch of the fuel supply chain, as far upstream as practicable. For example, electric generators will pay the mandated carbon tax to their coal, oil or natural gas suppliers, who will forward the payment to the government; the generators will pass along the tax to the retail electric utility which in turn will charge it to customers – to the extent that market conditions allow. Similarly for petroleum products (e.g., gasoline, jet fuel, heating oil), with government collecting the tax from refiners or importers of refined petroleum products, and the taxes passed on to oil wholesalers and eventually to retail customers. This approach will maximize accuracy and incentives and minimize paperwork and leakage.
