Malawi Confederation of Chambers f Commerce and Industry (MCCCI) chief executive officer Chancellor Kaferapanjira observed on Sunday that carbon tax must be proportionate to usage, not necessarily be fixed according to capacity of a vehicle.
The tax, which is payable annually depending on the engine size or cylinder capacity (cc) of the motor vehicle, puts a price on releasing greenhouse gases from fuel combustion and industrial processes as countries work to meet the global climate change targets negotiated in Paris in 2015.
Set at K4 000, K8 000, K11 500 and K15 555 for motor vehicles with engine size of between 0 to 1500, 1501 to 2000, 2001 to 3000 and above 3000, respectively, the carbon tax is due when renewing the Certificate of Fitness (CoF) of a motor vehicle at the Directorate of Road Traffic and Safety Services (DRTSS) where Malawi Revenue Authority (MRA) has created offices to facilitate payment of the tax.
But Kaferapanjir said: “A vehicle with a small capacity can use more fuel than a truck or lorry with a huge capacity. In this case, it is the small capacity vehicle that has caused more damage to the environment than the truck. It is baffling to note that this was not obvious to government bureaucrats despite advice given to them.
“In terms of application, the tax should be some percentage of the price per litre or some defined amount per litre. Whatever would have been chosen, it should be a per litre charge. The more you use the more you be punished.”
The new tax, first introduced in Africa in South Africa this year, is in place in Canada, France, Colombia, Sweden and Australia with the World Bank saying 46 countries now have such levies or similar schemes in place or scheduled for implementation.
In France and Australia, efforts to increase carbon taxes were shelved after a backlash from voters angry with rising energy prices.
Consumers Association of Malawi executive director John Kapito observed that while taxes are punitive and hurtful to consumers, the growing number of vehicles and their impact on the environment needs to be mitigated.
Energy expert Grain Malunga said he hopes that the new tax is intended to subsidise the operation of Environmental Protection Agency’s budget which he said may help protect the environment.
Minister of Finance, Economic Planning and Development Joseph Mwanamvekha said in his 2019/20 Budget Statement that Treasury has introduced carbon tax to expand the revenue base and as part of the initial steps to mitigate the effects of climate change.