Environmental Policy

List Of The Committee Members Of Research Panel_List of the committee members_Options For Environmental Tax

Options For Environmental Tax

Taxation PlanPlan 1: Carbon tax combining low tax rate with subsidy
Object of taxation Carbon (fossil including petroleum, coal and natural gas)
Target of taxation Combination of incentive effect and subsidy effect
Taxation timing At of production and import
Taxation level 3,000 yen/tC (about 2 yen per one liter of gasoline)
Use of tax revenues Subsidy for countermeasures against global warning (e.g., action to facilitate introduction of CO2 reduction technologies such energy conservation
Reduction measures (Common in Plans 1 to 4)
The following are exempt from taxation:
  • (1)Possibility for tax gathering is small (fuel of international airline, international marine transport and deep-sea fishery)
  • (2)Non-fuel use of petroleum (Use as raw material of petroleum)
Environmental preservation effect CO2 emission in 2000 will stabilized 1990 level (estimate by the Discussion Group of Economic System under Global Warming).
Tax revenues and economic influence Tax revenues: About 1 trillion yen Influence on GDP: -0.06% (year)**
Considerations +Tax rate is low.
+Subsidy is highly effective.
+necessary for detailed evaluation and allocation of subsidy.
Merit/Demerit (M) Low tax rate and tax returned as subsidies affect economy less.
(D) To gain effect as expected, appropriate subsidiary allocation system must be constructed.
Taxation PlanPlan 2: Scandinavian type carbon tax
Object of taxation Carbon (fossil including petroleum, coal and natural gas)
Target of taxation Incentive effect only
Taxation timing At of production and import
Taxation level 30,000 yen/tC (about 20 yen per one liter of gasoline)
Use of tax revenues General financial resources (see the note below)
Reduction measures
  • (1)Special measures are taken to energy gulping industry (steel, chemical or glass etc.)
  • (2)Companies which make an agreement with the government about CO2 reduction are exempted from taxes, or
  • (3)The whole industrial sections except for consumer and transport sections are exempted from taxes
Environmental preservation effect Almost same with the above (when the reduction measures are not taken consideration).
Tax revenues and economic influence (when reduction measures are not taken consideration) Tax revenues: About 10 trillion yen Influence on GDP: from -0.50% to -1.36% (by 2010)
Considerations +centered around the consumer and transport sections.
+measures must provided separately for industrial sections.
Merit/Demerit When the reduction are adopted: (M) Emission restraint is possible in the consumer and transport sections where the CO2 emission is expected to rise from now on.
(M) Influence on the industrial sections is relatively small.
(D) necessary to motivate the industrial sections for CO2 reduction.
(D) High tax rate makes a burden.
Taxation PlanPlan 3: Carbon/energy tax combining low tax rate with subsidy
Object of taxation Carbon + energy (electric power generated from fossil fuels, nuclear power and hydropower)
Target of taxation To achieve CO2 reduction goal and other environmental loads by combination of incentive effect and subsidy effect
Taxation timing At of production and import
Taxation level Tax is imposed on Carbon / energy with the rate of 50:50
-Carbon taxation: 1,500 yen/tC
-The remains are imposed on energy
Use of tax revenues (1)Subsidy for countermeasures against global warmings, (2)Subsidy to technology development of solar generation, etc.
Reduction measures (1)Tax exemption for fuel for co-generation
Environmental preservation effect As for CO2, effective use of subsidies might result in effect plan 1.
Tax revenues and economic influence Tax revenues: About 1 trillion yen
Influence on GDP: Almost plan 1
Considerations +Taxation on broad and shallow basis.
+Taxation on broader consumption including nuclear power and hydropower energies (taxed area is wider than plan 1)
Merit/Demerit (M) New energy development expected to accelerate compared plan 1. (D) As in the case of plan 1, appropriate subsidiary allocation system must be constructed.
Taxation PlanPlan 4: International carbon/energy tax with gradual tax rate
Object of taxation Carbon + energy (electric power generated from fossil fuels, nuclear power and hydropower)
Target of taxation To achieve CO2 reduction goal and other environmental loads only by incentive effect only
Taxation timing At of distribution*
Taxation level Tax is imposed on Carbon / energy with the rate of 50:50
-Carbon taxation: 1,500 yen/tC for the initial year
-The remains are imposed on energy
Use of tax revenues (1)General funds, (2)Subsidy for measures for CO2 reduction of developing countries
Reduction measures
  • (1)Implementation of arrangement of boundary taxes
  • (2)Tax exemption for small consumption
Environmental preservation effect In ten years after the tax introduction, CO2 emission will stabilized 1990 level.
Tax revenues and economic influence (when reduction measures are not taken into consideration) Tax revenues: Initial year -- About 1 trillion yen 10 years later -- About 10 trillion yen Influence on GDP: from -0.31% to -0.94% (by 2010)
Considerations It must reviewed whether the border tax adjustment can be implemented effectively.
Merit/Demerit (M) Border tax adjustment make it possible to avert affects on competitiveness without sector-to-sector reduction measures. (M) Step-by-step introduction make it possible to prepare fully. (D) overcome to implement the border tax adjustment.
Note:
Some countries relieve tax on the revenue neutrality basis, others utilizes the revenue for the general policies including environmental ones considering the taxation level and revenue scale.
*
At the time of production for the electric power generated from fuels other than fossil fuels.
**
Economic influence was analyzed based on the SGM Japan Model utilized in the first report. As the reduction measures suggested in plans 2 and 4 can not be analyzed by this model, economic influence values in the table are reference values calculated without reduction measures taken into consideration.
Page top