EDITORIAL: Environmental tax

The government has decided to introduce a new levy to finance measures intended to slow global warming as part of the tax changes for next fiscal year.

Although the new environmental tax is supposed to be the centerpiece of the government's policy efforts to stem harmful climate change, the administration of Prime Minister Naoto Kan is strangely showing few signs of reveling in a major political achievement.

That is probably because the administration has rushed to decide on the new tax without making clear the basic ideas behind it or how the money to be raised will be actually used, thereby leaving the plan half-baked.

The new levy will be introduced in the form of a 50 percent increase in the existing tax imposed on imports of fossil fuels like oil and coal. When fully implemented, the measure will produce 240 billion yen ($2.86 billion) in new revenue.

An environmental tax, by nature, works to curb demand for fossil fuels that emit greenhouse gases when burned. An eco-tax inevitably carries certain negative economic effects. Such a levy, for one, puts a drag on the economy by increasing the burden on businesses and individuals. The poor bear the brunt of the adverse economic consequences because such a tax causes prices of daily necessities to rise. It also works to blunt the effects of the government's policy efforts to stimulate economic growth and narrow income gaps by increasing social security benefits to low-income earners.

If Japan alone introduces a heavy new tax, it risks prompting companies to shift production overseas to escape the burden. In that case, the step won't help reduce global emissions of greenhouse gases even if it leads to a cut in Japan's emissions.

The new tax has been designed to spread the burden "thinly and broadly," according to the Tax Commission, apparently as a result of consideration to various factors.

Drivers will be required to pay an extra 0.76 yen per liter of gasoline, which translates into an average annual outlay of about 1,200 yen per household. While its effects on the economy and people's livelihoods may be limited, the tax still won't do much to curb greenhouse emissions.

If this is the best realistic initial step we could hope for, the government needs to work out a system to make the public more willing to accept a burden for a cleaner future so that environment-related taxation can grow into a truly powerful means.

Many of the Environment Ministry's policy proposals and programs related to environmental issues were designated for postponement or abolition in the government's budget review last month due to "poor prospect for actual benefits."

The government cannot hope to win public support for a green tax initiative unless it clarifies how the new money will be used.

The Kan administrations has so far failed to promote debate on efforts to fight global warming. The track record of his predecessor, Yukio Hatoyama, was no better.

It is clearly necessary for the government to do more to win public support for such measures as the scheme to require electric utilities to buy electricity generated with alternative energy sources and the emissions-trading system now being considered.

The administration has introduced the new tax in such a rash manner that many people may suspect the real aim is to plug the hole in the budget that will be created by the planned cut in corporate taxes.

There is no doubt that a green tax is an effective policy tool to push society toward a low-carbon future. It is vital to nurture the green tax, introduced after a fashion, as a prelude to full-fledged ecological taxation.

To do so, the government needs to use the new revenue in a wise and effective way. The money would be well spent if, for instance, it is used to promote energy-saving technology and provide incentives for developing countries to reduce their emissions.

--The Asahi Shimbun, Dec. 18