A government advisory panel tasked with studying environmental taxes adopted a proposal Wednesday for the introduction of a carbon levy by as early as 2005.
The plan, which is short on specifics but has the broad aim of helping to curb global warming, must now be sold to the public and the government.
The tax proposed by the Environment Ministry panel would be levied on fossil fuels, including gasoline, in accordance with carbon content levels.
It would seek to reduce carbon dioxide emissions, which are considered the primary cause of climate change and account for more than 90 percent of Japan’s greenhouse gas emissions.
“We have reached the stage of starting full-scale discussions (on the carbon tax) with other relevant circles,” Environment Minister Shunichi Suzuki told the panel meeting Wednesday.
The panel said the tax would curb energy consumption in the home, industry, and transportation sectors by raising the price of fuel, including petroleum, coal and natural gas.
Revenues from the tax would also be used to subsidize energy-saving investment, the panel said, without specifying how.
The Environment Ministry plans to pitch the tax to the Finance Ministry, the government’s Tax Commission, the ruling coalition, businesses and other concerns in the fall. The ministry will also hold public consultations and generate public comments.
As carbon dioxide emissions continue to rise, the Environment Ministry believes that achieving Japan’s reduction target under the 1997 Kyoto Protocol would be almost impossible without an environment tax. The protocol is expected to come into effect early next year with its anticipated ratification by Russia.
The protocol obliges Japan to cut its greenhouse gas emissions by an average of 6 percent from 1990 levels during the period between 2008 and 2012.
But greenhouse gas emissions in Japan have continued to rise in recent years, mainly from homes and the transportation sector.
In 2000, emissions were 8 percent higher than 1990 levels, meaning that Japan must reduce its emissions by 14 percent from 2000 levels to achieve its obligations.
The advisory panel said that the tax rate should not be decided until an assessment is made in 2004 on the nation’s performance in terms of combating global warming.
But calculations made by the National Institute for Environmental Studies, a ministry affiliate, suggest that if a 3,400 yen tax per ton of carbon is imposed in 2005 and if all the revenues from the levy — estimated at about 950 billion yen — are used to finance measures to counter climate change, it will be possible for the nation to reduce carbon dioxide emissions by 10 percent in 2010 from 2000 levels.
The 3,400 yen per ton of carbon is equivalent to 2 yen per liter of gasoline or per kilogram of coal, according to the ministry. With this tax rate, annual utility expenses per household would reportedly increase by 5,500 yen.
If the tax is kept relatively low around this rate, it will have little negative impact on the nation’s economic growth, the panel said, quoting the institute study.
The panel added that the tax should be levied on importers and processors of fossil fuels, instead of on retailers and consumers, as it would be easier to manage carbon dioxide output that way.
Hiromitsu Ishi, chairman of the Tax Commission, is reportedly willing to start discussions over an environment tax in the fall.
In midterm tax reform proposals released in June, however, the commission said it is unsure whether a carbon tax is necessary, and that the matter needs further debate to gain public acceptance.
Members of the commission are also said to be divided over whether the country needs an environment tax.
Finland, Germany, the Netherlands and Britain have already levied carbon taxes. Their rates vary, but many are higher than that proposed by the Environment Ministry, and the revenues are mostly used to cover cuts in income taxes and social security premiums.
Most of the countries have reported progress in curbing their greenhouse gas emissions, the ministry said.
Finland, for example, boasted a 7 percent carbon dioxide reduction in 1998 over the estimated emissions it would have had if no tax had been introduced.
To achieve its Kyoto Protocol goals, the government has outlined a step-by-step approach, dividing the period between 2002 and 2012 into three stages.
Efforts during the first phase — from 2002 to 2004 — focus on voluntary emission-cutting efforts by industries and on government regulatory measures.
The government is scheduled to review the situation after each phase and plans to take further measures if necessary.