It is rare to post some of our
conversations with cross-postings to TAX Agencies. But since Uganda is drafting
her first National Climate Change Law and also reviewing the National
Environment Act (1995). I am tempted to share some thoughts building from an
expert exchange reflecting proposed "James Hansen-Carbon Tax" under
the Trump Administration.
Sometime back in 2012 during the
formulation of the National Climate Change Policy, one colleague expressed
concern on nascent legal and policy regime in Uganda with minimal contribution
to tax base but gross utilization of small resources collected through
difficult inequitable tax measures. This trickled my mind and tried to work out
a process on resource mobilization under the Climate Change Policy, however it
did not work out.
Recently, I was engaged in an
expert online discussion for thinkers in global financing frameworks and
pricing emissions. The basic fact for establishment of economic instruments in
environment & natural resources since Rio(1992) was to influence behaviour
i.e. consumption and production patterns. Over the years, Governments have
established tax systems (always inequitable) and also followed a disturbing
practice though surprising agreed on in Agenda 21 commonly known as 'Polluter
Pay Principle' in otherwise a policy infused with a fee on the right to
pollute.
For example, the duty on
importation of second hand vehicles which have continued to be a source of
severe environmental health problems with possible correlation to the current
cancer issues. Interesting, the fees collected have always been consolidated in
our beloved Consolidated Fund and appropriated through the budgeting process.
This has ameliorated our environmental challenges.
Going forward, every year MoFPED
and her agencies such as URA develop new taxes to commensurate our budget needs
(now taking of UGX 30 trillion). The question is would a carbon tax be a safe
haven for MoFPED & URA to induce tax proposals? Noting that previous tax
increments on selected products such as fuel have grossly affected low income
earners who rely on public (un-regulated transport) with fares bouncing like a
beam under Cathode ray oscilloscope. In US, Portland State University
completed an economic study a couple of years ago (when gasoline was $4.00 /
gallon) which determined that behavior change at that price point would require
at least $100/ton, thus $1.00/gallon at the pump thus concluding that
"elasticity" in spending behavior is relevant.
The second question is what tax
level should induce behaviour shift of the magnitude to achieve low greenhouse
gas emissions? But before responding, one legislator might shut you down that
you are killing investments and making doing business in Uganda difficult. Hima
Cement factory and others might come-up and use all tactics to offset you.
In US, an opinion survey was
cited as a game changer on tax matters. Imagine we tested appetite for taxes
and alternative means to reduce emissions by 22 percent by 2030 (Uganda
Commitment under UN Convention on Climate Change). Sometime an opinion survey
was ran on whether people should pay for some services in Mulago and a
significant number was in favour. With the current extreme weather and climate
shocks all over the country, I guess the public would support any instrument to
address climate change in Uganda.
Therefore, for any new tax, MUST
win public acceptance. Unfortunately, in the USA, there is limited support for
the James Hansen style, who promotes a carbon tax and some analysts find
the Republican proposal a calculated non-starter. Interesting a growing
majority is supporting a 'cap, fee and invest' type of program.
I would rally for that too. Let
me be exemplary, If the Public (currently) supports a definitive reduction of
greenhouse gases, then administer an fee for emissions ascribed to top emitters
(such as business contributing to GHG emission from sectors like Mining, Cement
production, transport (road & aviation), construction) and design consumer
protection measures, then invest those fees in emission reducing public
investment plans like 'SGR', afforestation, renewable energy projects and
matching costs for electricity generation and consumption.
Basing on simple projections
while keeping other factors constant, we can mobilize the required USD 1.8
billion for green growth (see Economics of Green growth study done by MoFPED
& GGGI) and attract at least USD 10 from international finance institutions
for every USD 1 spent under the PFMA.
What are your views???
