Carbon taxes are taxes placed per unit of carbon emissions by a firm; they are intended to incentivise firms to reduce their emissions and switch to more sustainable forms of production. These include, using renewable energy sources, gas desulphurisation etc. With a free-market economy and a thriving high-tech manufacturing industry, Singapore is a prosperous nation. Numerous corporate offices are attracted by its cheap tax rates and first-rate infrastructure. Due to this, there are a high amount of carbon emissions in the country. Reducing the magnitude of these emissions is, therefore, an imperative aim of the government as they aim to make Singapore a more sustainable Green Economy.
In 2016, the government of Singapore signed the Paris Climate Accords and they created their very own Climate Action Plan to reduce carbon emissions by 35% by 2030. One particular policy within this plan is the carbon pricing strategy Singapore has adopted in 2019. Initially, the government placed this carbon tax at a rate of $10 per ton of carbon emissions. Thus, various firms in the manufacturing sector began to cut down emissions and plan for more sustainable resource use. However, there were various opponents to this policy saying that to see tangible change it is required that the government increase the rate of taxation. The government responded to this claim saying that they would release a plan of action that would have a low initial tax rate of $5 in 2023, but this would rise to $25 in 2024 and increase to $45 in 2026. Eventually the tax rate may even become around $50. The aim of releasing this plan of action is to give producers time to plan and adjust to the market environments. Placing an initially high rate of taxation would have placed a barrier in economic growth as business costs would have suddenly risen.
The tax placed, currently, only applies to the firms that have emissions of over 25000 tons of carbon per year. Although there are relatively few firms that have emission rates above this number, they account for the majority of all emissions in Singapore. The higher tax revenue that is being gained due to this tax is being reinvested in households to provide them with aid in paying their energy bills. How effective do you think this policy will be? Feel free to reach out in the Contact Us Box below.
Sustainability is a cause that is relevant today more than ever! Don't be scared to raise your voice and spread awareness about it. Be smart about your investments by looking at the larger picture. Stay sustainable!
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