Spend carbon tax income on climate issues

Jeffrey Gogo Climate Story
CARBON tax, a levy on carbon dioxide emitting oil-based energies, should be spent for the purposes for which it is collected – delivering climate-sensitive interventions. The tax, which enforces compliance on motorists against carbon emissions, is one of a few consistent performers among Zimbabwe’s tax heads, many of which have sharply declined. In the past five years, carbon tax revenue has reached $178,4 million in total, just 0,6 percent shy of the combined target for the period, according to figures from the Zimbabwe Revenue Authority (Zimra).

But since the levy came on board in 2001, there is no clear indication as to whether or not the earnings have been distributed in a manner that supports low-carbon development.

And this limitation begins at the source. The text in the law that established the carbon tax – the Income Tax Act – is not absolute about its climate functions.

The Act says the carbon tax “shall be for the benefit of the Consolidated Revenue Fund” – a key Government account that holds the bulk of public revenues, particularly from taxation. This Fund is administered by the Finance Minister, and once the resources are pooled together, the minister uses his discretion in the distribution of the income in line with Government priorities for public service.

It appears plausible, therefore, earnings from carbon tax have been utilised for purposes other than those that are climate-aware. It is clearly a policy issue, but no-one from Treasury was available to discuss the matter.

Repeated attempts to get the Secretary for Finance, Mr Willard Manungo, to talk were fruitless. He did not answer his cellular phone neither did he respond to text messages. Further, the application of the carbon tax in its early years didn’t even seem an effective tool for curbing automobile industry emissions, but more a clever design to boost Government revenues.

With motorists obliged to pay the tax only on a quarterly or annual basis during the motor vehicle licence renewal payment, the system disregarded the individual’s frequency of travel, which is the frequency of carbon emissions.

Such an application of the law appears to support the existing patterns in Government expenditure, which provides no predictable plans for developing sustainable low-carbon public transport systems from carbon tax earnings.

That system changed later on into one that forces heavy fuel consumers to pay more for the pollution they cause, and vice-versa.

Today, motorists pay US3 cents per litre of petrol, and per litre of diesel, or 5 percent of cost, insurance and freight value, according to Zimra.

That’s about $13 per tonne of carbon dioxide emissions equivalent (CO2e) for petrol, and $11 per tonne of CO2 emissions for diesel. This is substantially lower than the average global price of carbon that ranges between $25 to $35.

It remains unclear why the carbon tax here is levied at a flat rate for both diesel and petrol, where diesel has a higher emissions potential compared to petrol. On the average, each litre of diesel produces 2,7 kg of CO2 emissions equivalent, and petrol 2,3 kg, scientists say.

Now, with the local transport industry generating over 1 000 gigatonnes of CO2e in 2000, according to the Second National Communication, a key Zimbabwe report to the UN Framework Convention on Climate Change, it will be crucial to ring fence carbon tax income towards delivering efficient transport systems that are climate smart.

The emissions numbers from the transport sector have undoubtedly soared since 2000.

Zimbabwe’s vehicle population had climbed 50 percent to 1,2 million at the end of 2014, but the industry itself has not developed with equal speed in terms of adopting new technologies that limit emissions, save for the use of very limited ethanol blends beginning three years ago.

The public transport system remains in bad state, while Zimbabweans are only too happy to acquire cheap used Japanese cars that have been banned in their home countries for their strong emissions potential.

There is even no clarity whether the carbon tax covers the high polluting airline industry. However, in view of the rising climate risks in Zimbabwe, Government should now begin to take into account the systematic changes that are needed to set the economy on a sustainable climate resilient trajectory.

Combined with revenues from elsewhere, and supported by policies that incentivise low-carbon development, the carbon tax income may be deployed into the development of climate smart road infrastructure technologies and research.

Limiting greenhouse gas emissions, especially carbon dioxide, minimises the impact of climate change and global warming on people and the earth.

Scientists blame these gases for causing the rapid increase in the earth’s surface temperatures, extreme weather conditions such as droughts, floods, heat waves and cold.

God is faithful.

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