Pigouvian tax

1. Pigouvian Tax
By Nicole and Chris

2. What Is Pigouvian Tax?
•A tax that is used to reduce negative
externalities.
•For example a tax applied to carbon
emissions to encourage entities to reduce
their carbon foot print.

3. Pigouvian Tax
Implementations in New
Zealand
•We have seen taxes introduce to
cigarettes, alcohol, fossil fuels and carbon
emissions via the emissions trading
scheme

4. How Pigouvian Tax Works
•Pigouvian tax system works by taxing
users according to their consumption.
•The more you use the more you pay in
tax.
•This then encourages a reduction in the
product use.

5. What are the advantages of
this form of Tax?
•A reduction in negative externalities
•Money can be put back into the
community and the environment
•Taxes the ‘rich’ though this could be seen
as a disadvantage as well

6. What are the disadvantages of
this form tax?
•More burdens for businesses
•Doesn’t set a standard for businesses to
reach.
•Cost Implementation
•Doesn’t stop people from using the products
that cause negative externalities.

7. In summary
•Pigouvian Tax is used world wide because
of its effectiveness.
•Its effectiveness allows governments to
put money back into the community,
environment and provide essential
infrastructure.
•Most importantly a reduction in negative
externalities