Wednesday, October 4, 2023

Worldwide discussion of environmental taxes gains momentum 1996.10.15

 Environmental taxes are intended to reduce emissions of substances that have a negative impact on the environment, such as CO2, NOx, SOx, wastewater, and waste, and to secure financial resources for environmental protection. An increasing number of countries around the world, including EU countries and international organizations such as the OECD (Organization for Economic Cooperation and Development), are considering environmental taxes. A carbon tax is a typical example of an environmental tax. A carbon tax is a tax on the emission of carbon dioxide (CO2), which is said to be a cause of global warming. emissions, which are said to cause global warming, and is already being introduced in several countries. In Japan, the introduction of an environmental tax has been the subject of active debate for several years, with the Environment Agency's "Study Group on Economic Methods of Taxes and Surcharges Related to the Environment" playing a central role in discussing the introduction of such a tax.


Effectiveness of Carbon Tax and Reduction of Environmental Impact

 In its report issued in June 1996, the study group noted that there is a limit to the extent to which regulatory methods can be used to reduce the burden on the environment, and that the use of economic methods is required. In the case of environmental problems caused by a large number of economic activities or diffuse pollution sources, the regulatory approach makes it difficult to set reduction targets and monitor their implementation, resulting in high administrative costs and excessive reduction costs. The economic approach, however, allows each entity to choose the most economical course of action through the market mechanism, resulting in the optimal allocation of resources at the lowest cost. In addition, the regulatory approach lacks incentive to reduce polluted rock above the regulated value, whereas the economic approach has a continuous incentive effect because the reduction of pollution is linked to economic benefits, which has a long-term positive impact on technological development.

 The "Global Warming Economic System Study Group" has projected what the environmental impact reduction effect would be. If a carbon tax of about 3,000 yen per ton of carbon, or about 2 yen per liter of gasoline, is imposed and the tax revenue is used to subsidize the introduction of CO2 emission control technologies, it is estimated that emissions could be reduced to below the 1990 level by the year 2000 and by 3% by the year 2010. The five countries that have already introduced carbon taxes are Finland, the Netherlands, Sweden, Norway, and Denmark. Table 1 shows the tax rates and other information for each country. In addition to carbon taxes, these countries also impose taxes and surcharges on other environmentally sensitive substances. In addition, most of these countries use tax revenues as a general revenue source rather than as a cost of environmental measures, in view of the fact that they aim to achieve benefits from the taxation itself.

 Globally, although the movement to introduce a carbon tax and environmental tax is gaining momentum in developed countries, they are not all on the same page. The U.S., an industrialized country, is opposed to the introduction of a carbon tax, and even the environmentally conscious EC once adopted the "EC Directive on the Introduction of a Carbon Tax" in 1992, but it has been shelved due to strong opposition from industry and the U.K., which is concerned about declining international competitiveness.

 At present, it is a matter of watching the situation in other countries, but there is no doubt that some kind of economic approach, if not a carbon tax, will become an unavoidable part of Japan's environmental policy. Japan's inaction on the global-scale environmental problem of global warming will no longer be tolerated internationally.

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