‘Carbon tax’ in Bangladesh from next Fiscal Year

‘Carbon tax’ in Bangladesh from next Fiscal Year

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Fahad Ferdous, UNB Staff Writer
Dhaka, Apr 29 – The government has planned to impose ‘carbon tax’ from the next fiscal year on the sectors that are polluting the environment, aiming to deal with the environmental concerns and improve the resource efficiency.
According to sources at the Ministry of Finance and National Board of Revenue (NBR), Finance Minister AMA Muhith might announce the carbon tax imposition in the next fiscal (2017-18) budget to be placed in Parliament in June next.“This new type of tax will be the part of the government’s initiative to create a new pocket for revenue collection,” a senior NBR official told UNB.
Apart from imposing tax on the sectors that are harming the environment, the government might go for imposing tax on the ‘junk food’ which is very much bad for human health, he said, “But, we’re giving a special attention this time to carbon tax as this will play a vital role in protecting the environment,” he said.
A carbon tax is a tax levied on the carbon content of fuels. It is a form of carbon pricing. Carbon is present in every hydrocarbon fuel (coal, petroleum, and natural gas) and converted to carbon dioxide (CO2) and other products when combusted. In many countries carbon tax is imposed on vehicles based on the use of their fuel efficiency.
Earlier, the sources said, the Finance Minister sought opinion from the World Bank about the imposition of carbon tax, and it has already given its affirmative response to it.
On March 17, WB country director Qimiao Fan had written a letter to Finance Minister AMA Muhith suggesting the government to impose carbon tax, saying it will be a ‘fiscally prudent measure’.
According to the World Bank, a carbon tax directly sets a price on carbon by defining a tax rate on greenhouse gas emissions or – more commonly – on the carbon content of fossil fuels.
The sources said carbon tax might be realised through value added tax (VAT). The World Bank says that Bangladesh can impose the carbon tax as the fuel oil is at the lower level in the international market.
Since green house gas (GHG) emissions caused by the combustion of fossil fuels are closely related to the carbon content of the respective fuels, a tax on these emissions can be levied by taxing the carbon content of fossil fuels at any point in the product cycle of the fuel.
NBR officials said carbon tax offers social and economic benefits. It is a tax that increases revenue without significantly altering the economy while simultaneously promoting objectives of climate change policy.
“The objective of a carbon tax is to reduce the harmful and unfavorable levels of carbon dioxide emissions, thereby decelerating climate change and its negative effects on the environment and human health,” said one official.
Carbon taxes offer a potentially cost-effective means of reducing greenhouse gas emissions.
A number of countries have implemented carbon taxes or energy taxes that are related to carbon content. Most environmentally related taxes with implications for greenhouse gas emissions in OECD countries are levied on energy products and motor vehicles, rather than on Co2 emissions directly.
More importantly, they said, the government wants to give a big boost to its revenue collection and it looks for newer avenues to do so as the national budget size is getting bigger every year.
The Finance Minister has already hinted that the size of the next budget will be around Tk 420,000 crore.

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