The government decided to consider introducing a carbon tax in order to finance the trillion won fund. When a new carbon tax is established, industries that are highly dependent on fossil fuels, such as the steel and oil industry, will be hit directly. Increasing the gas tax increases the burden on diesel drivers and the freight and transportation industry. The fund’s operating entity and usage are also subject to debate.
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“Complex energy and environmental taxation, simplified by carbon tax”
According to the 2021 work plan announced by the Ministry of Strategy and Finance on the 19th, it is planning to establish a climate response fund and review the carbon pricing system to design a carbon-neutral friendly system. To this end, in the first half of this year, the’Basic Bill for Implementing a Decarbonized Society for Response to the Climate Crisis’ is planned, and the fund will be operated from next year.
The government is considering financing plans to raise funds for several trillion won. The introduction of a carbon tax is being considered as a financing plan for the Climate Response Fund. The Ministry of Science and Technology plans to comprehensively review the carbon price system, including carbon tax, through tax research services by the end of this year.
There is already an atmosphere in the political world that a carbon tax should be introduced. In addition, the Democratic Party pledged to introduce a carbon tax at last year’s general election on the premise of’sufficient social discussion’.
There have also been laws that require the introduction of a carbon tax to pay basic income. On the 7th, Congressman Yong Hye-in of the Basic Income Party proposed the’Basic Income Carbon Tax Act,’ which requires that 100,000 won per month be paid to the people of the country with the funds secured by taxing a carbon tax of 80,000 won per ton of greenhouse gas.
The government will also consider ways to impose prices on carbon emissions. At a briefing on the 2050 carbon neutrality strategy on the 7th of last month, Hong Nam-ki, Deputy Prime Minister of Economy and Minister of Equipment, said, “The policy will be decided through a comprehensive review of the carbon tax.”
To respond to climate change, it is necessary to reduce the use of fossil fuels, which account for the majority of greenhouse gas emissions, and some analyzes that the introduction of a carbon tax is effective.
The National Assembly Budget Office said in its report on’Structural Changes in the Korean Economy and Response Strategies’ that when introducing a carbon tax based on the carbon content of energy sources, it is possible to effectively regulate carbon emissions while simplifying the energy taxation.
Currently, the domestic energy tax system is complicated by individual consumption tax, transportation, energy, environment tax, automobile tax, and local resource facility tax. In addition, it is judged that the application of the principle that the pollutant must be borne by the pollutant discharger is insufficient and needs to be corrected.
An increase in diesel tax is also one of the ways to raise money. At a press conference for mid- to long-term national policy proposals in November last year, the Presidential Council on Climate and Environment suggested that the relative prices of gasoline and diesel should be gradually adjusted to 100 to 95 or 100 to 100 in the transport sector. The current gasoline tax, which is 530 won (per liter), is to match the gasoline tax, which is 746 won.
Instead of reducing coal power generation, it also suggested that more than 50% of environmental costs are reflected in the electricity bill step by step while expanding renewable energy. The intention is to reorganize electricity bills, which are based on coal power generation.
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The business world “The carbon neutrality is also tough… Up to the tax burden”
It is difficult to avoid controversy over tax increases if the introduction of a carbon tax or an increase in diesel tax is promoted.
Even now, companies are paying environmental taxes such as diesel tax and paying for carbon emissions through the greenhouse gas emission trading system. According to the National Tax Statistical Yearbook, the amount of the transportation, energy and environment tax reported in 2019 amounted to 1.48 trillion won.
From 2015, the carbon credit trading system has been implemented to reduce greenhouse gas emissions. Accordingly, there are concerns that the introduction of a carbon tax or an increase in diesel tax could increase the tax burden and result in double taxation. Although the government is going to review the overall tax system, sectors with high carbon emissions are inevitable.
From the standpoint of these companies, the burden of carbon border tax, which is expected to be implemented by major countries such as the United States, China, and the European Union (EU), is also considerable, and may be overwhelmed by additional expenses.
According to Greenpeace Seoul Office’s report on the impact of climate change regulation on the Korean economy, if these three countries introduce a carbon border tax in 2023, major industries such as steel, oil, and automobiles will have to pay about 600 billion won per year. appear. The analysis is that the cost can increase to 1.87 trillion won in 2030.
An official from the National Federation of Entrepreneurs said, “There are a number of companies that are struggling to follow the government’s carbon neutral and other low-carbon economic transition policies. If the economy is difficult due to Corona 19, companies may rebel against additional taxes.” Pointed out.
Raising taxes for industries with high carbon emissions may lead to burdens of national expenses. This is because if the gas tax rises, the price of oil for consumers will eventually rise.
On the other hand, it is expected that a’fight’ is also expected for the operating entity of the Climate Response Fund, which will reach several trillion won. It is also expected that there will be an opinion that the private sector who finances the fund should operate. Even if it is operated by the government, the interests between ministries such as the Ministry of Science and Technology, the Ministry of Small and Medium Businesses, and the Ministry of Environment are complicated, so it is necessary to discuss where the relevant ministries will be decided.