EU’s Carbon Border Charge Dodges Tax Definition for Now

It’s been referred to widely as a tax, even by the European Commission’s president, Ursula von der Leyen. It has been drawn up by the indirect taxation unit within the commission’s taxation department.

But, the commission insists, the proposed European Union charge on carbon-intensive imports—called a carbon border adjustment mechanism—is not a tax.

It is a “climate policy measure aiming at preserving the integrity of the EU’s climate ambition,” according to the draft regulation published earlier this month. The proposal must be approved by the European Parliament and EU countries.

Not defining CBAM as a tax sidesteps a common ...