Luxury Consumption Tax

Local Project

On average, the wealthier someone is, the more they will contribute to the climate emergency. This is partly because wealthier groups do more carbon-intensive luxury consumption, like regular flying and driving in larger cars. They also have investments and savings which prop up companies and activities that produce greenhouse gas emissions. Overall, the world's richest 1% contribute more than twice the greenhouse gas emissions of the poorest half of humanity.

Yet we all face the same global carbon budget: the amount that can be emitted before temperatures rise above dangerous 1.5C or 2C levels. More business class flights and SUVs means less for poorer communities to use on growing food, heating homes, and life’s other essentials.

Taxing luxury consumption is one way to reduce greenhouse gas emissions. This would make carbon-intensive luxury activities more expensive, disincentivizing them and highlighting that this behavior is not compatible with avoiding the climate emergency. It would also raise revenues that could be spent on supporting poorer communities and the rollout of clean technologies. Higher costs for greenhouse gas emissions might also encourage luxury manufacturers to innovate to save costs. Meanwhile, reductions in inequality are generally good for societies.

Luxury consumption taxes would need to be coordinated globally so luxury manufacturers and consumers don’t just move their greenhouse gas emissions to another place. They also need to be designed carefully so that they target luxury consumption and the wealthiest individuals, not the poorest in society.

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