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Below: Countries listed were the top twenty carbon dioxide emitters in 2012 in ascending order (China number one and Ukraine number 20).Source: IMF calculations using emissions data from the International Energy Agency and an assumption that a US$30 per ton tax reduces emissions by 10 per centFigure1. Revenue from $30 per ton Carbon Dioxide Tax for Large Emitters, 2012directly to the Treasury. In fact, carbon taxes are a highly practical extension of what most finance ministries in advanced and developing countries are already doing, namely administering systems of fuel taxes – carbon charges can be folded into existing road fuel excises and similar charges applied to coal, natural gas, and other petroleum products.Myth number seven is that carbon pricing is just another tax to fund “big government”. On the contrary, carbon pricing is about making tax systems more efficient by raising more revenue from taxes on fossil fuels which can be used to cut other taxes that harm economic performance, such as taxes on labor and capital. The fiscal dividend from carbon pricing can be quite large – around 1 per cent of GDP or more had large emitters priced carbon at US$30 per tonne of 4.3%1.6%2.6%1.3%1%0.5%0.47%1.7%3.4%0.8%1.3%0.6%0.56%2.2%2.9%% of GDP2.6%0.8%0.7%0.3%0.48%012345CO2 in 2012 (see Figure 1). So it is very important (as with any tax) to use the revenues wisely – if not for broader fiscal reform, then for spending that generates comparable benefits to the economy from cutting harmful taxes. So does carbon pricing impose a big cost on the economy? It need not (myth number eight) because of the potential economic benefits from reduced tax burdens as carbon pricing revenues are put back into the economy, which counteract the adverse economic effects of higher energy costs. A caution is that we generally recommend against sudden and drastic policy changes – it is better to phase in carbon pricing gradually, to ease transitions and allow time for businesses and households to adjust their investment and budgeting strategies.Myth number nine is that, leaving aside the