When the term carbon tax appears on a country's budget for the first time, sometimes people get confused because they are usually already burdened with many forms of taxation. This might be the case with Sri Lanka this week. There were several statements on the social media asking “What is this carbon tax?” after the budget presentation 2018.
The story of carbon tax is related to the greenhouse gas(GHG) emissions across the world which is driving the global warming potential. Many of the GHGs are carbon based (CO2, CO, CFCs and Methane) and therefore, the discussion is centered around the term “Carbon”. The physical effect of CO2 and the other GHGs in the atmosphere can be measured as a change in the Earth-atmosphere system's energy balance. Carbon taxes are one of the policies available to governments to influence reductions GHG emissions.
Currently many conversations around the implementation of the climate agenda highlight that putting a price on carbon is essential for the success in the international response to climate change. Therefore, many interested parties are in the lookout for the new initiatives related to carbon pricing. During a panel discussion at COP 21 in Paris in 2015, it was mentioned, “China has seven pilot emissions trading systems, and has announced its intention to launch a national system in 2017” and the recent news states this has been pushed to December 2017. A World Bank Group report "Carbon Pricing Watch 2016" provides further information about key developments and prospects of existing and emerging carbon initiatives.
If you refer the UNFCCC website, it also shows examples of how the carbon taxes are applied in few cases.
The above image also explains how the tax procedures contribute from various locations across the world. The world is looking at large polluters to take strong measures in taxation to influence the reductions of emissions. However, in Sri Lanka's case the taxation applies to fossil fuel based vehicles and Sri Lanka also plans to phase out fossil fuel based vehicles by 2040. It is important to note that current emissions from heavy vehicles are not yet properly regulated in Sri Lanka.