There are mixed reactions to the introduction of carbon tax, levied on vehicle owners, who use roads in the country.
Environmental experts have questioned the rationale of pooling carbon tax into government Account Number One at Treasury and not towards the environment, natural resource and climate change management sub sector.
Tabling the 2019/20 National Budget, Minister of Finance, Economic Planning and Development, Joseph Mwanamvekha justified the move as a way to expand the national revenue base and in part to mitigate the effects of climate change.
He said carbon tax will be calculated based on the engine capacity of the motor vehicle and the applicable rates ranging from K4 000 to K11 500.
“In terms of application, locally registered motor vehicles will be exempted at first registration and payments for locally registered motor vehicles will be done annually. Foreign registered motor vehicles will require payment of the carbon tax at the port of entry,” said Mwanamveka.
Globally, carbon tax directly sets a price on carbon by defining a tax rate on greenhouse gas emissions (ghg) or—more commonly—on the carbon content of fossil fuels.
However, Julius Ng’oma, national coordinator of the Civil Society Network on Climate Change (Cisonecc) while lauding the new tax measure argues that the carbon tax revenue needs to be channeled to Climate Change Fund.
“The introduction of carbon tax is a welcome development as it will assist the country to move up in terms of implementation of our nationally determined contributions through reduction of emissions of ghg in the transport sector.
“But carbon tax revenue needs to be channeled to Climate Change fund and not Account Number One and mechanisms should be put in place so that the money from carbon tax should assist in the fight against climate change rather than diverting it to be used for other purposes,” he said.
In exercise of the powers conferred by Section 77 of the Environment Management Act of 1996 the then Minister of Natural Resources, Energy and Mining Aggrey Masi on December 12, 2018 established the Climate Change Fund to provide financial and other resources for undertaking climate change interventions in Malawi.
This fund, experts believe, is where carbon tax money should be pooled.
Policy campaigner and environmental activist, Dorothy Tembo – Nhlema agrees with Ng’oma and argued that lobbying for introduction of carbon tax started way back.
“When Environmental Affairs Department was sharing a concept on the establishment of a Climate Change Fund, other sources of funding included the very same carbon tax. Hence, I have welcomed the introduction of carbon tax as a very positive development,” said the activist in a separate interview.
Tembo was, however, quick to add that she didn’t think Ministry of Finance has undertaken exhaustive consultations solely on the implementation of carbon tax as a revenue generating activity for government. She feels broader consultations would have revealed other potential sources that could have benefitted the country.