Q. Consider the following statements:
1.The US Inflation Reduction Act (IRA) aims to make the U.S tax code fairer by imposing a minimum tax of 15% on America’s wealthiest, most profitable corporations.
2.The Carbon Border Adjustment Mechanism (CBAM) implemented by the European Union (EU) is a mechanism that relies on direct agreements with trading partners to regulate their emissions.
Which of the statements given above is/are correct?
Explanation –
Statement 1 is correct. The US Inflation Reduction Act includes a provision that imposes a minimum tax of 15% on corporations with profits exceeding $1 billion, aiming to ensure that these corporations pay their fair share of taxes and contribute to reducing the federal deficit. This is part of the act’s broader goal of reducing inflationary pressures, investing in domestic energy production, and promoting clean energy technologies.
Statement 2 is incorrect. The Carbon Border Adjustment Mechanism (CBAM) implemented by the European Union is not based on direct agreements with trading partners to regulate their emissions. Instead, it is a mechanism that levies a carbon tax on imports of certain goods into the EU, based on the carbon price embedded in those goods. The aim is to prevent “carbon leakage,” where companies relocate their production to countries with less strict emissions regulations, and to encourage other countries to adopt similar carbon pricing policies.
Source: Forum IAS
