Eu+to+Propose+Carbon+Tax+on+Fuels

EU to Propose Carbon Tax on Fuels Explanation: The European Union is going to try implementing a new indirect tax on commodities including gasoline, diesel, natural gas and coal. Even though there already exists a market with tradable emission permits, more measures were thought to be necessary meet legal targets to reduce production of greenhouse gases. This new tax isn't intended to be a 'end all' method to solve the problem but will in fact open up other more stringent procedures. As a supranational organization, every new move that is made is usually done as a compromise for the various countries.
 * Title of Article:**
 * Source: [|http://online.wsj.com/article/SB10001424052748704415104576250363830343404.html] **
 * Vocabulary:**
 * Commodity: A fungible (same no matter who produces it) product that is produced on a very large scale. i.e. iron
 * Raw Material: Material that has been taken directly from nature or has been unprocessed and can potentially be used as a fundamental material to make something else.
 * Tax: A financial charge imposed by a government upon producers or consumers

The reliance on not just one solution (tradable emission permits) but two with the addition of the tax is a smart solution. As seen from the graph, the tax will increase the supply curve and the new equilibrium point is at Q1, which is less demand than originally. This will help solve the problem of reducing greenhouse gases and also encourage the development of substitutes. These commodities are rather inelastic, and so the consumers will have to bear the brunt of the tax. However, due to this, they will seek to find other ways to make them less of a necessity by for example, buying electronic cars. In addition, the government will be able to get a lot of revenue.
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 * Conclusion and Evaluation:**