Taxing the wrong way
Imposing tax on carbon is something that environmentalists believe should have taken off way back when the impact of greenhouse gas emissions became starkly apparent.
In essence, global warming pollution needs to have a price on it just like any other act which brings some damage to humanity.
The momentum to tax emissions is becoming more pronounced. Elsewhere, they are even fighting that governments should stop subsidising fossil fuel projects from where the worse emissions come.
Perhaps, in our efforts to join the fight against climate change—or it could simply be to increase our revenue base—we, as a nation, have decided that motorists should be carbon-taxed.
Prevalent discourses on the latest tax obligation do not completely censure Malawi Revenue Authority (MRA) for introducing carbon tax. They just pick holes in the arrangement.
In its entirety, carbon tax must encompass all machines that produce the hazardous emissions. And it is not vehicles only that get caught up in the maze.
For instance, persistent energy problems that the country is experiencing are pushing many households and industries to unprecedented diesel consumption.
In the process, they will have their own share of emissions which will not be taxed. That is where the arrangement becomes unfair, and no tax system should be discriminatory, for all intents and purposes.
Imposing taxes at source would at present be the ideal procedure because it will ensure fairness— that what one really emits is what they are being ‘penalised’ for.
MRA would simply assign a certain percentage to fuel prices at pump stations so that buyers contribute their tax the moment they purchase the commodity.
The problem with imposing tax motorists when they go to renew their vehicles’ certificates of fitness (CoF) is that they will not necessarily be being ‘penalised’ in line with their emissions but because of owning the vehicles.
You cannot assume that every vehicle seeking a CoF has been or will be on the road, emitting the dangerous gases for which it should be fairly taxed.
In MRA’s arrangement, even vehicles which have been or will be off the road for the six months covered by the carbon taxes will not escape paying what they do no owe anyone because they will need the CoF to use the country’s roads even if it is once a month.
That is where taxing at source makes more sense. It becomes a convenient levy system which no motorist and others using fuel can escape.
That is the impartiality that any tax system must support.
Of course, MRA and its partners might still be exploring several other ways of pricing emissions, but at least in the meantime, an effectual technology structure is not one of them.
In advanced countries, they have tools for measuring greenhouse gas emissions in machines such as vehicles which are then taxed according to their carbon footprint.
Vehicles are fixed with these tools which efficiently and justly calculate one’s emissions for which they are billed.
T h a t technology, of course, would go through decades to work in Malawi. But while we could be exploring it, it is fair to ensure there is fairness in how emissions are taxed.
Another problem with placing a price on carbon by merely basing it on a vehicle’s engine size is that it is not the amount of emissions that is being billed.
Engines emit different levels of greenhouse gases depending on several factors such as age, speed, weather, vehicle weight and trip length.
Of course, there are average calculations for every typical vehicle in terms of emissions, but still, there are several discrepancies in how motorists are being taxed in the new arrangement by MRA.
In other territories, vehicles emitting certain amounts of carbon dioxide—usually because they are old—are technically barred from operating on their roads by either being subjected to punitive carbon taxes or simply pulled off, literally.
Most of these vehicles are ending up in Malawi and other poor countries where they emit huge chunks of carbon dioxide.
It is only now that several poor countries are implementing carbon tax systems on vehicles, or something near that, as they unite with the rest of the world to fight climate change.
In fact, countries that are severely taxing carbon emissions are doing so to discourage individuals and industries from staying with the huge emitters.
The Malawi Government partly did the same by introducing taxes depending on vehicles’ years of make where old ones pay bigger amounts of tax.
Well, the newly introduced carbon tax system seems to be erroneous in many ways. Nevertheless, what it generates must do the perfectly right job which is offsetting the negative externalities of the hazardous emissions
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