The Price of Carbon: Politics and Equity of Carbon Taxes in the Middle Income Countries of South Africa and Mexico

This study provides the first analysis of the politics and ethics behind carbon taxation in South Africa and Mexico. Using the preexisting scholarly frameworks of climate change policy, tax policy, and Robert Putnam’s two level games, I determine that in both cases, international pressures from multilateral negotiations and international development funding sources initiated the carbon tax policymaking process within the environment and treasury ministries of both countries. Once environment ministry bureaucrats initiated the carbon tax a lack of politicization of climate change (both countries) and an additional gain of raising revenue (Mexico) allowed the taxes to become law. I then turn to the laws themselves, analyzing their implications for climate justice. In both cases, the government did not adopt any proposals made interest groups representing environmental concerns and poverty groups, and instead shaped the bills so as to tailor to the interests of heavy manufacturing. This policy decision had the main effect of weakening the climate change mitigation impact of the carbon tax, and exacerbating issues of regressivity by not recycling revenues towards projects aimed at poverty reductions. I conclude this paper with an analysis of the ethics of such a carbon tax in developing countries. The carbon taxes, as they currently exist, sacrifice the rights and needs of the present poor for those of the future generation while an ideal policy that addresses poverty betters the condition of both groups. In order to ensure climate justice and for all groups and prevent political backlash, policy makers in middle-income countries must make carbon reduction policies with the unique challenges of poverty and climate change mitigation in mind.