| Summary: | This technical note discusses how to implement a carbon tax at the national level. A carbon tax is a tax on fossil fuels, such as coal, natural gas, and crude oil (including fossil fuel products such as gasoline), that is imposed according to the carbon dioxide (CO2) each fuel emits when burnt. The rate at which this CO2 is taxed is known as the carbon tax rate or carbon price. This paper uses simple numerical calculations to model the effect of a carbon tax on fuel prices, fuel use, fiscal revenue, and CO2 emissions. A carbon tax would also have a substantial beneficial effect on local air pollution, although this is not explicitly modelled in this note
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