viduals and other entities, such as car producers, incentives for socially optimal decisions; (ii) fuel tax is simple and
easy to administer, making it a good candidate for a policy on which countries may coordinate. While we are not the
first to point this out (see Nordhaus 2007), the apparent mismatch between the existing policies and this prescription
suggests that public authorities have not been very attentive. We would begin by changing the labels of specific
taxes so that they match the externalities they put price on. Specifically, we suggest that fuel consumption taxes be
called “carbon and pollution” taxes.