IMF, citing $1.9 trillion in government subsidies, calls for levies to curb use

By Howard Schneider, WashPost, Wednesday, March 27, 11:30 AM

Governments around the world subsidize gasoline, electricity and other major forms of energy to the tune of $1.9 trillion a year according to a new International Monetary Fund study that calls for that amount to be offset through carbon taxes or other means to battle climate change and other social problems.

For the United States, that would require a $1.40 levy per gallon of gas and other fees totaling about $1,170 per person to offset the full cost of fossil fuel use, including “externalities” such as pollution and steps to mitigate the effects of global warming.

Not recognizing those costs, the fund argues, has had profound consequences for energy markets and the world economy: encouraging overconsumption; leaving some nations short of funds to address health, education and other needs; and distorting investment decisions.

While controversial, the agency argued that governments should over time develop taxes and energy policies that ensure energy users pay in full.

(More here.)