Japan To Look At Carbon Tax

by Mary Swire, Tax-News.com, Hong Kong

24 November 2010

The Japanese government, to further its stated policy of cutting greenhouse gas emissions by 25% from 1990 levels by 2020, is looking at introducing a carbon tax on fossil fuel consumers for enactment next year.

It is reported that the ruling Democratic Party has put forward the plan for a carbon tax, and that this will be looked at by the government’s current tax panel within its final report, expected by the end of this year. The proposal could then be included in the climate bill which the government is looking to enact early in 2011, and which could also contain an emissions trading scheme.

While its details have yet to be decided, the revenue obtained from such a tax on carbon dioxide emissions, which could reach some JPY250bn (USD3bn) annually, could be ring-fenced and used for funding investments in clean energy, low carbon projects.

In a recent review, the Organisation for Economic Cooperation and Development said more must be done by Japan to reduce reliance on fossil fuels and to achieve its climate targets more efficiently. The review had also recommended putting a price on carbon through a mandatory cap-and-trade scheme in combination with a carbon tax.

Recommended