Tax Write-Up: Budget 2022 Expectations: Revision of Carbon Tax Rate

By: Evan Shaquille, Choo Zhi Xuan, Shannon Lim (Research and Training Department) 

In light of the current pace of climate change, many researchers and scientists have cast a spotlight on the unsustainable increasing temperatures seen worldwide. The 26th United Nations Climate Change Conference of the Parties (COP26) saw an overwhelming number of countries committing to reduce their carbon emissions and take a stance on climate change with Singapore seen as the role model in South-East Asia.

Singapore’s desire to secure itself as a worldwide community for carbon exchanging can be seen in COP26. As a part of the core Green Economy program, the creation of a carbon revaluing and benefits center will package green money, manageability, account, credits revaluation, and hazard the executives. 

In 2019, Singapore presented its first taxation charging for carbon, as the first country in Southeast Asia to do so. Singapore is as of now at the forefront of the worldwide effort to make a carbon-based economy.  

The creation of a carbon market is of course fraught with challenges, most notably transparency, regulation, price volatility, and liquidity. In light of these issues, it is essential that any prospective carbon exchange creates a platform that addresses these concerns – and Singapore has the edge over other countries considering the creation of such a market, as the country has a history of regulating commodities trading and financial services, as well as its reputation for transparency. Furthermore, Singapore can leverage strong relationships with major carbon emitters in Southeast Asia, such as the U.S. and China (both of which are competing for dominance in the region) to drive investment in its potential carbon trading hub and decarbonization efforts across ASEAN. 

Currently, Singapore is the principal South-east Asian country to present a carbon charge in 2019, set at a pace of S$5/tCO2e (for the period 2019-2023), which applies to coordinate outflows from offices emanating 25 ktCO2e or more in a year. However, its current pace of $5 per ton wasviewed as on the low finish of the range. Hence, Singapore’s reconsidered carbon charge rate for 2024 will be declared in the following year’s Budget 2022, which will likewise show what’s in store up to 2030. According to Finance Minister Lawrence Wong, the rationale behind this agenda is for the Government to ensure a fair direction of its carbon charge, with the objective of mirroring the expense of carbon and impacts venture choices viably.  

While Singapore introduces higher carbon charges in the subsequent years, this change may trickle down and be borne by Singaporeans. Hence the nation may likewise upgrade U-save refunds to help lower-and center pay families with the progress. 

https://www.akingump.com/en/experience/practices/climate-change/speaking￾sustainability/singapore-cop26-and-creating-a-center-for-carbon-trading.html

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