The Ministry of Natural Resources, Energy and Mining has started engaging officials in the Ministry of Finance, Economic Planning and Development on implementation arrangements for the carbon tax which came into effect on November 25 last month.
Since introduction of the tax, several players have expressed fear that the tax regime was hurried and devoid of wide consultations, and that funds collected might not go towards repairing the country’s environment.
These concerns also came to the fore during the National Technical Committee on Climate Change and Disaster Risk Management meeting in Lilongwe, where the Ministry of Natural Resources, Energy and Mining stated that it will be meeting their counterparts from finance on the issue.
Inside sources at the Ministry of Natural Resources, Energy and Mining suggest the Ministry of Finance went ahead to introduce the carbon tax before finalising discussions on how the money will be channeled to the Environment Management Fund as established under the Environment Management Act of 1996.
Co-chair for the technical committee, who is also Director of the Department of Climate Change and Meteorological Services (DCCMS) Jolamu Nkhokwe confirmed the meeting took place and that the matter regarding carbon tax was discussed after it came through one of the presentations.
“As a committee it is important to track mitigation initiatives since we are destroying a lot of trees. The carbon tax has to come in because we need resources for different activities in climate change management and without the extra resources, we need to fund the Climate Change Fund in this country so that the poor man down the ground must benefit from these climate change initiatives,” said Nkhokwe.
He stated that the committee strongly feels the carbon tax revenue can help sustain some of the donor supported projects which die a natural death when implementation period elapses.
Ministry of Finance spokesperson Davis Sado acknowledged the two ministries are engaging on the matter, but he was non-commital on the timelines and status of discussions over a possible deal.
He said as it stands no money realised from the carbon tax will go to any environment fund and the arrangement remains as it were announced by the Malawi Revenue Authority MRA that the funds will be deposited into Account Number One.
“Carbon Tax is not an exclusive being applied in Malawi alone, even within the region, this tax applies. The spirit of the tax is in direct response to environmental protection on carbon emissions. Since the carbon tax has just been introduced in the country the modalities of implementation provided in the guidelines are as communicated by the Malawi Revenue Authority (MRA),” he said.
Environmental expert and director for Leadership for Environment and Development (Lead) Sosten Chiotha said in an interview it is only proper that the government should be sincere and use the funds on environmental activities.
“The justification for a carbon tax is the fact that climate is changing and one of the causes in Green House Gases [GHG] so as mitigation you have to put a levy on those activities that increase the production of greenhouse gasses.
So with that in mind, the carbon tax that has been collected should be targeted to those programmes that help Malawi in managing climate change and that should be both adaptation and mitigation” he said.
The Minister of Finance, Economic Planning and Development on September 9 announced in Parliament the introduction of carbon tax to, among other, raise funds for climate change programmes.
Motorists are paying the tax when renewing the vehicle certificate of fitness (COF). Motor vehicles with an engine size of less than 1 500CC pay K 4, 000 and goes up to K15 000 for engines above 3 000 CC.