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A Synthesis of Energy Tax, Carbon Tax and Emission Trading in Taiwan 247
6. Conclusion and Suggestion
The negative impact of carbon tax is only one
third that of energy tax in reaching the same goal of
reducing CO 2 emission by 25 percent. The government
should enforce carbon tax instead of energy tax in Taiwan.
Inasmuch as CO 2 emissions per unit of caloric
value are concerned, carbon tax on fuel oil should be
close to gasoline and diesel, but that on coal should be
higher than fuel oil. However, the tax rate in the energy
tax bill of 2006 for fuel oil is one twentieth that of gasoline,
and the energy tax rate for coal is even lower
than that for fuel oil. Carbon tax is better than emission
trading system in fairness, acceptability, timeless, scope
of levy, use of tax revenue and cost of transaction. The
emission trading system surpasses carbon tax in certainty
of emission reduction, however. Carbon tax is
therefore more suitable to enforce than the emission
trading system, albeit the government should consider
enforcing both at the same time in order to enhance the
effectiveness in emission reduction and demand big
emitters such as the power sector and energy-intensive
industries to share more reduction obligations. It is
worthy of note that to implement both carbon tax and
emission trading system simultaneously is not without
precedent. They have been enforced in Sweden, Denmark,
Norway, Finland, the Netherlands, and Great
Britain.
Table 7
Merits and Demerits of Carbon Tax and Emission Trading System
1.Fariness
2.Acceptability
3.Timeliness
4.Scope of levy
5.Tax Revenue
6.Cost of Transaction
7.Certainty of Emission
Reduction
Carbon Tax
Yes.
Polluters to pay principle
Yes.
Similar tax system(air-pollution
fee)existed in Taiwan
Yes.
Can be implemented without cap
emission
Yes.
Taxpayers include all of energy users
Yes.
Government can use the tax revenue
for tax reform
Yes.
Cost of transaction is low
No.
The actual reduction depends on the
price elasticity of demand for energy
Emission Trading System
No.
Grandfather Rule
No.
No similar tax system exists in Taiwan
No.
Generally cannot be implemented without cap emission
No.
Cost payers include only the big energy users( e.g.
power industry and energy intensive industries)
No.
Except retaining part of the emission right for auction,
the government cannot raise any tax revenue.
No.
Cost of transaction is high
Yes.
The actual reduction does not depend on the price
elasticity of demand for energy