Carbon tax: an unjustified levy

The imposition of carbon surcharge by the government, in the place of the petroleum development levy (PDL), in the Budget 2009 to 2010 on POL products has evoked a sharp reaction from almost all sections of society, as it will further push up POL prices, and trigger higher inflation. In an intriguing development, the country representative of the IMF for Pakistan, Paul Ross has said that the decision to impose the carbon tax, at a fixed rate, was a decision by the Pakistan government, and that the IMF had nothing to do with it. The purpose of the tax is to protect the environment by reducing the emissions of carbon dioxide, and thereby resisting climate change. Carbon tax is implemented by taxing the burning of fossil fuels – coal, petroleum products, such as gasoline and aviation fuel, and natural gas – though only in proportion to their respective carbon-content and the release of carbon dioxide into the atmosphere. Pakistan’s economy is currently facing challenges in terms of materializing promises of $2 billion made by the Friends of Democratic Pakistan, during the Tokyo conference for FY2009-10. (July 5, 2009)