Mon, Oct 26, 2009 page8

• The carbon tax proposal needs more airtime

  • By Kao Jehng-jung 高正忠
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  The Cabinet’s Tax Reform Committee recently decided that the government should gradually implement a proposed energy and carbon tax next year at the earliest, but this decision was instantly rejected by Premier Wu Den-yih (吳敦義). Wu and legislators reacted as if the taxes would increase public suffering, adding that the government should not levy new taxes until after the economy recovers. It seems everyone is against the energy and carbon tax proposals.

  These reactions are disappointing because they fail to address the matter. Most people, in fact, jumped to conclusions before understanding what the proposal entails. The development of civil society in Taiwan should be fully encouraged, but this kind of decision-making runs counter to that aspiration.

  As a matter a fact, neither an energy tax, a carbon tax nor even an environmental tax are news. While countries in northern Europe began imposing carbon taxes around 1990, their public welfare systems remain enviable. Taxes, therefore, do not necessarily cause public suffering. Everyone would be in favor of the kind of social welfare benefits seen in northern Europe.

  It is true that some industries will be adversely affected by such taxation. In particular, energy-wasting, high carbon emission industries would be affected, which would make it difficult for those hoping to rely on cheap energy in the long run. However, such an outcome could be a good thing in terms of public benefits and long-term industrial development.

  A short-term impact might be better for these industries than slow long-term suffering. Even grade school students know that energy conservation and carbon emission reduction lies in our future. As a result of cheap energy sources, there are no incentives for Taiwanese industries to make progress on that front; instead, they will become decreasingly competitive.

  The international community has recently begun calling on corporations to assess their carbon footprint and energy efficiency. Companies that fail to adapt will disappear. If a smaller impact could push Taiwanese industry to catch up with the efficiency of enterprises in other advanced countries, that would be a good thing for Taiwan’s future industrial development.

  Will gas prices of NT$45 per liter be considered high in future? If one argued that NT$10 for a bowl of plain noodles is expensive, everybody would counter that this is cheap. But would the same assertion have been right 40 years ago, when a bowl of noodles was only NT$2.

  As for the argument that these taxes should not be levied until after the economy recovers, that might be true for other types of taxes. By that time, however, it would be even harder to impose energy and carbon taxes because when the global economy recovers, oil prices will skyrocket. We must not forget that not so long ago, critics expected that oil prices would exceed US$200 per barrel and that everyone would save energy and reduce carbon emissions even without the implementation of energy taxes.

  It is hard to decide whether one should support or oppose the proposal. If the goal really is to save energy and reduce carbon emissions, there are actually more urgent policies than a carbon tax, such as quantity restrictions. Such restrictions are needed to plan an effective carbon tax and carbon-emissions trading system. We already know we will have to save energy and cut emissions, so any policy should be considered a major national initiative and be openly discussed.

  Government officials and legislators should not be allowed to shoot down a policy on a whim before it has had a chance to be discussed thoroughly.

  Kao Jehng-jung is a professor in the Institute of Environmental Engineering at National Chiao Tung University.

  TRANSLATED BY TED YANG
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