IMPOSING a carbon tax and an emissions trading system will help generate additional revenue for Asia-Pacific countries, and will likely have little inflation impact, the Asian Development Bank (ADB) said.
“Both can provide a clear carbon-price signal, either in terms of the cost of future emissions or the quantity of expected emissions reductions,” the ADB said in its Asia-Pacific Climate Report.
“They can also generate additional revenue for governments, which can then be used to support sustainable economic growth and ‘green’ investment.”
A carbon pricing scheme pushes companies to reduce their own emissions to minimize their tax exposure. Its proceeds are usually spent on greenhouse gas mitigation projects.
“A carbon tax is not only an effective approach to reducing emissions, but can also raise significant revenues that could be redirected to the highest-value public uses,” the bank said.
The Philippines currently does not have a formal carbon pricing system. The country aims to cut its emissions by 75% by 2030 under its commitment to the Paris Agreement.
A carbon tax would not hinder economic growth and won’t accelerate inflation, the ADB said.
“The primary impact of a carbon tax is not to reduce growth but to shift the economy from high-carbon to low-carbon activities, thereby affecting the carbon intensity of the economy rather than overall gross domestic product.”
However, governments also must ensure compensation and retraining for workers that may be suffer job losses in carbon-related industries, it added. — Beatriz Marie D. Cruz
