DOF eyes carbon emissions tax

The Department of Finance (DOF) is exploring the possibility of imposing a tax on carbon dioxide emissions to help further reduce pollution and promote alternative sources of energy, a top official said yesterday.

In an interview, Finance Undersecretary Karl Kendrick Chua said the government is studying the carbon tax to determine if the country is ready to implement the tax scheme.

“We are learning as much as we can because it’s a new tax. This is a global priority so it’s something we want to learn and see if we are ready to propose a carbon tax,” Chua told reporters on the sidelines of a workshop on carbon tax.

According to Chua, increasing taxes on products or activities that aggravate carbon emissions should be part of a two-pronged approach to help boost the shift to renewable sources of energy.

“The way to promote renewable is not only to give incentive, but also to tax the alternative higher because that’s how you will encourage the shift,” the official said.

“Before, diesel and bunker (oil) were taxed zero excise and coal is taxed at P10 per metric ton, which is P0.1 per kilo, which is hardly anything. There was no significant push,” he said.

But Chua said the government has already started its approach to curb carbon emissions through taxation under the Tax Reform for Acceleration and Inclusion (TRAIN) Law.

“It (TRAIN) begins to address it. Over time, hopefully, it will make a dent as we increase it gradually,” he said.

Among the provisions of Republic Act 10963 or the TRAIN Act is the increase in the excise tax of diesel at a staggered rate of P2.50 per liter, P2 per liter and P1.50 per liter in the first three years of its implementation.

It also increased coal excise tax from the previous rate of P10 per metric ton to P50 per metric ton in the first year of its implementation, P100 in the second year, and P150 in the third and succeeding years.

On another matter, Chua said the DOF would complete the submission of all packages under the Comprehensive Tax Reform Program (CTRP) to Congress by the end of the month.

He said all proposals would be completed with the submission of Packages 3 and 4.