The Finance Department said Friday the government will include carbon taxes in the reform package to be submitted to Congress to generate additional revenues of P122 billion.
Finance Undersecretary Gil Beltran told Manila Standard the government would propose carbon taxes along with lower taxes, rationalization of the value added tax exemptions and sweet and oil taxes.
“Yes, one of the options,” Beltran said in a text message when asked if carbon pricing will be included in the tax reform package.
“The tax is calculated by measuring the carbon content of different fossil fuels. Also, experts in carbon tax are in agreement that imposing higher tax rates would lead consumers to change behavior, while lower rates may not do much to change behavior but can provide funds for carbon mitigation programs,” the National Tax Research Center said in a study.
The tax research arm of the government said the state might gain as much as P121.9 billion from the proposed carbon tax scheme.
The NTRC said for the purposes of estimating revenue from the proposed carbon tax, a rate of P100 to P1,000 per ton of carbon dioxide could be imposed to make it at par with other countries already implementing the tax.
The think tank also said that if the proposed carbon tax pushed through, it could be set at progressive rates to reflect the ability of taxpayers.
Based on the country’s CO2 emissions outlook from 2015-2030, the government may generate an annual average of P12.2 billion to P121.97 billion.
About P6.52 billion to P65.17 billion may be generated from the electricity generation sector, P2.81 billion to P28.1 billion from transportation, P2.08 billion to P20.79 billion from industries and P0.79 billion to P7.91 billion from the commercial, residential and agriculture areas.
By type of fuel, P6.99 billion to P69.88 billion may be generated from the use of coal, P4.04 billion to P40.44 billion from oil and P1.17 billion to P11.16 billion from natural gas.
“The the tax is calculated by measuring the carbon content of different fossil fuels. Also, experts in carbon tax are in agreement that imposing higher tax rates would lead consumers to change behavior, while lower rates may not do much to change behavior but can provide funds for carbon mitigation programs,” The NTRC said.
An earlier report said a P100 tax slapped on the social cost of carbon might result to reduction of about 1 percent of the total carbon emission in the country.
The demand for carbon intensive energy inputs, such as coal and oil, would likewise decrease, according to NTRC, but the reduction in coal demand would be higher because it was more carbon-intensive than oil.