This 1991 report by David Morris looked at the implications of establishing a carbon tax in Minnesota. Minnesota should impose a carbon tax designed to raise revenue rather than to change behavior. A reasonable tax might be $6 per ton, in line with taxes already imposed by European governments, although lower than those proposed by the European Commission. Such a tax would raise the cost of energy and raise revenues and might encourage efficiency.
The term “sin taxes” is well-known. For years it has been used to describe taxes on liquor and tobacco and gambling. Recently we have broadened the definition to include environmental sins as well. We are increasingly taxing environmentally immoral behavior in a variety of ways and for a variety of purposes. Concerns about a new kind of environmental pollution “global warming” have spurred several countries to impose a tax on carbon emissions. A modest Minnesota carbon tax could raise sufficient revenue to finance two important pollution reducing strategies: the creation of a homegrown renewable energy industry and a dramatic expansion in energy conservation programs for low income households.