Editorial Comment: Earmarking carbon taxes for climate spending good move

25 May, 2022 - 00:05 0 Views
Editorial Comment: Earmarking carbon taxes for climate spending good move

The Herald

Climate change is real and Zimbabwe is one of the countries that will be ever more frequently hit by the adverse effects, added to which we have our treaty obligations to minimise our carbon emissions to play our part in global efforts. 

All of this costs money, a lot of money, and while in theory there are supposed to be global funds to aid developing countries, not much has been paid into those funds so there is not much to take out. That means we are going to have to pay our own way quite a bit.

We have, of course, been setting aside a lot of funds since the advent of the Second Republic. On the amelioration side we have been building dams to cope with the ever more inconsistent rains, when even a season that produces total rainfall near normal, like the one we have just been through, or above normal, like the last season, sees late starts, spells of excessive rain, and long dry spells.

This is one reason why we need lots more big expensive dams, the sort of reservoirs that can catch the run off from the excessive spells, and even fill when the ever more frequent cyclones hit, and can keep our farmers productive during dry spells and during droughts. 

The dams thus need to cope with multiple seasons, so need to be big, rather than the small farm dams that used to be adequate most of the time.

The global effects of climate change may well mean a reduction in food output; no one yet knows how the new balances will work with increase in some areas and sharp decreases in other areas. 

The smart way forward is for Zimbabwe to keep ramping up its own production and ensuring self-sufficiency, a policy already been implemented, at considerable cost as we need to find the inputs.

But we also need to be reducing our carbon output, or at least looking at how we can develop and grow fast economically without increasing our carbon output. That means looking at green energy sources. 

Already, for reasons of cost, we have ramped up the ethanol percentage in our petrol to 20 percent.

So far as electricity is concerned there is the problem that coal is basically the only guaranteed source, hydro being hit by drought and solar not working at night. 

But we have plans for a lot more solar and a lot more hydro, Zesa talking about the many gorges on the Zambezi and its major tributaries, largely in Zambia, that can be dammed, at vast expense.

The point is that Zimbabwe is already spending a lot of money to ameliorate and adapt to climate change and plans to spend a lot more. 

We have not been ignoring the problem and the Treasury has been spending money under the Second Republic and is continuously increasing the budget.

There are now suggestions that the carbon tax, a special duty on petroleum fuels, needs to be ring fenced specifically for climate-related work. 

This seems desirable, but we need to note that it does not suddenly mean we will be spending money we were not spending before.

What it does mean is that we can add to what we are doing and can start allocating funds to other projects.

Generally speaking all taxes are paid into the common pool of the Consolidated Revenue Fund and Parliament, when approving the Government budget, gives the legal go-ahead for spending the money from this pool on the vast range of Government spending across thousands of headings and sub-headings.

But there are some exceptions. The two taxes, and although they are not called this that is what they are, that are raised for road maintenance and expansion, the vehicle licence money and the road tolls, are collected by Zinara and are specifically allocated for spending on roads. 

Another exception is the licence fee for possessing radio and television equipment, which the courts have recognised is a tax when this was queried in a lawsuit, and this is allocated by Parliament to ZBC to pay for the transmission network.

There is no fundamental objection to allocating the carbon tax to a carbon fund. The money is significant, if less than what we need, with $1,763 billion collected in the first three months of this year, close on $7 billion a year. Quite a lot of good work can be done with that sort of money. 

As a practical point it does not matter much if the carbon duties are paid into the consolidated revenue fund and then budgeted out for climate projects, or if they are paid into a special fund dedicated for climate work so long as they are earmarked for climate work.

The important point is that those paying the taxes, those buying petroleum fuels, need to know what they are getting for their money and be able to see what is being bought. This always helps to make people feel better, or at least less bitter about paying a tax. 

We have seen this with road tolls. When people drive past the contractors upgrading a road at least they know their tolls are being properly spent, with the most aware of the drivers knowing that the Government is having to supplement this with tax dollars while we catch up on a couple of decades of neglect.

The Aids levy on our income taxes is another tax earmarked for a specific task, and again some of the tax weariness was lessened when people agreed it was a reasonably fair way of coping with the HIV emergency. 

It will be the same with carbon taxes. That admittedly puts a lot of responsibility on the shoulders of those who will be doing the spending, presumably on approved plans largely drawn up by the relevant Government departments, with the Ministry of Environment, Climate, Tourism and Hospitality Industry in the lead. 

But much of what is planned is already in the National Development Strategy and that list can be expanded. The earmarking of the taxes also tells everyone that we are serious about climate change, and serious about raising our own funds to pay for what is needed. 

We have seen in other areas that once we do get serious about an urgent need, then development partners are more willing to help. We only have to look at the sort of support we have been getting for health in recent years.

The duties are not enough, so Treasury will have to continue funding a wide range of capital spending. But we need to publicise all that we spend, in Treasury funding and in the carbon taxes, to show that we as a nation are not just sitting back and that we are willing to spend a measurable fraction of our gross domestic product on helping ourselves cope with climate change and cut back our emissions.

Share This:

Sponsored Links