A carbon tax aims to reduce carbon dioxide emissions by taxing transactions that involve no carbon.Group of answer choicesTrueFalse

Understanding the Concept of a Carbon Tax

A carbon tax is a financial charge imposed on companies or individuals based on the amount of carbon dioxide (CO₂) they emit. This tax is designed to incentivize businesses and consumers to reduce their carbon emissions by placing a cost on the act of emitting CO₂.

Evaluating the Statement

The statement asserts that a carbon tax aims to reduce carbon dioxide emissions by taxing transactions that involve no carbon. This implies that the tax is applied to transactions without carbon emissions, which contradicts the fundamental purpose of a carbon tax.

Conclusion

Thus, the statement is False. A carbon tax specifically targets transactions that do involve carbon emissions, as the primary goal is to discourage CO₂ emissions and mitigate climate change. Taxing transactions that involve no carbon would not align with the primary objectives of the carbon tax system.