Carbon tax implementation hasty, full of shortcomings: Bandula

Friday, 18 January 2019 00:00 -     - {{hitsCtrl.values.hits}}



  • Suggests integrating carbon tax with vehicle revenue license


By Nuwan Senarathna

United People’s Freedom Alliance (UPFA) lawmaker Bandula Gunawardena yesterday called on President Maithripala Sirisena for a discussion with Finance Ministry officials addressing the shortcomings of the carbon tax, in order to minimise costs to taxpayers. 

“Government had failed to follow basic tax principles such as minimum cost of collection and compliance of tax. Therefore the Government has to reconsider and introduce convenient methods for taxpayers to reduce their costs,” MP Gunawardena told reporters at a media briefing, held in MP Thilanga Sumathipala’s residence. 

Gunawardena suggested that the Government should include the carbon tax with vehicle revenue licence fees, to minimize costs for taxpayers. He noted if the UPFA forms a Government, they would include all taxes similar to the carbon tax with the vehicle revenue licence, and later distribute funds among Government institutions to reduce costs for taxpayers. 

He charged that the Government had not conducted a study to identify the impact of the carbon tax on motorists, and failed to implement a mechanism to collect tax money more efficiently to reduce administrative constraints. Gunawardena also pointed out that the Government’s decision to levy the carbon tax for 2019 in 2020 was a result of administrative constraints, which arose due to insufficient planning by the Government. 

According to Gunawardena, the process of carbon tax collection through Divisional Secretariats, and subsequently crediting funds to the Department of Motor Traffic, would cause extra costs for the Government. Therefore he suggested a single integrated system of tax collection.

He said the carbon tax did not achieve its objective of reducing air pollution caused by vehicle exhaust fumes. He charged that funds collected from the carbon tax would be credited to the Consolidated Fund. Therefore, funds collected from the carbon tax would not be used to reduce environmental pollution.

“If the Government is trying to reduce pollution with the carbon tax, they should release those funds for Government entities like Central Environmental Authority, or compensate the public who are affected from environmental pollution,” he added.

He criticised the Finance Ministry’s decision to impose carbon tax on hybrid motor vehicles. He pointed out such vehicles were built to reduce carbon emission, and therefore tax exemptions should be given to hybrid motor vehicles, to encourage the public to reduce carbon emissions. 

Motor Traffic Commissioner General Jagath Chandrasiri announced the Government’s decision to impose the carbon tax from 1 January at a media briefing held on 9 January. 

The carbon will be based on the motor vehicle’s engine capacity, age, and fuel type. All electric vehicles are exempted from the tax. Accordingly, hybrid vehicles under five years old will be taxed at .25 cents per cm3, while vehicles running on petrol and diesel will be taxed at .50 cents per cm3. Passenger buses will be taxed a flat rate of Rs. 1000.