Islamabad:
Pakistan showed on Monday the reluctant to slap a carbon tax, which the International Monetary Fund wants the government to enter an effort to raise funds for the promotion of new energy vehicles as part of its resilience conditions under a new installation of loans from loans $ 1 billion.
The brief discussions about the new carbon tax took place during the starting meeting to end resilience and sustainable facilities (RSF), a PMA package of the IMF that is largely intended to prepare vulnerable climatic nations for disaster management .
Government officials did not support the proposal for carbon collection due to their implications for the growth of companies, according to people aware of discussions. They added that a detailed session on the carbon tax will take place today (Tuesday).
An IMF team is in the city to finish a new set of resilience conditions that Pakistan will adopt to qualify and take advantage of the estimated climatic loans of $ 1 billion. It will be the 26th Pakistan IMF program, but its purpose will be different from traditional bailouts for the support of the balance of payments.
The discussions of Pakistan-IMF are being carried out in the light of the World Bank Climate and Development Report. The World Bank has already identified the policy gaps, which the IMF and the Pakistan will try to unite through the adaptation of new policies.
The sources said that one of the resilience conditions could be the imposition of the carbon tax, that the lenders want Pakistan to impose traditional cars based on fossil fuels: internal vehicles of the combustion engine.
According to government estimates, 10% of total carbon dioxide emissions originate in the transport sector and a change to cleaner sources of vehicles will require massive funds and efforts.
The Ministry of Industries is in the process of finishing a five -year -old new energy vehicle policy (NEV). The initial estimates of the Ministry show that Pakistan needs at least RS155 billion additional funds until 2030, if you want to replace the fuel motor cars and motorcycles with clean fuel -based engines.
The almost 80% of Pakistan imported oil is used in the transport sector and conversion to cleaner energy vehicles can save currency reserves.
However, this conversion is quite expensive, which will require subsidies to reduce the cost of vehicles and promote a new infrastructure, including tax exemptions and concessions, the sources said.
Traditional two -wheeled motorcycles are up to 100% cheaper than two new energy vehicles. The new three -wheeled vehicle vehicle will be up to 123% expensive. The plan is that by 2030 to 90% of the new two and three wheels purchases should be based on renewable energy sources.
It is estimated that the new four -wheeled cars based on technology are expensive in 65% compared to combustion engines and the government wants at least 30% of the new purchases by 2030 to be based on new technologies, they said The sources.
The Ministry of Industries plans to propose multiple measures, which include zero federal taxes, reduced sales tax rate and tax retention rates on the purchase of new energy vehicles, regardless of battery size.
It is planned that income losses are compensated through the new carbon tax. Other measures may include allow bank financing for NEV that have up to RS10 million RS3 million
There is also a proposal for a free registration and without tolls on roads for new energy cars, sources said. The government also plans to establish about 750 new load stations until 2030.
Global lenders request to impose carbon tax on cars based on fossil fuels to raise funds to finance the new infrastructure for the promotion of clean energy vehicles, sources said.
According to the World Bank, a carbon tax could, from several perspectives, be beneficial for the development of Pakistan. Pakistan imports almost a third of its energy in the form of oil, coal and liquefied natural gas (RLNG) re-gasified at a huge cost, which contributes significantly to the country’s chronic fiscal stress, he added.
The introduction of a carbon tax would provide a clear signal to both companies and households to begin adopting efficiency measures and changing consumption and investment away from fossil fuels to renewable energy sources, he added.
A carbon tax would also expand the tax base by bringing producers currently not overcome in the informal economy, estimated to be between 35 and 50%, in the fiscal network to a low administrative cost, said the report of the World Bank.
The use of traditional fiscal instruments is more challenging in such contexts. A broad base carbon tax would avoid this and could be relatively easy to implement, administratively and politically, if gradually introduced, with an adequate income recycling to protect the poor and maintain an expansion of shared prosperity.
Around 51 manufacturers of various types of transport vehicles have obtained licenses and government incentives can help establish the infrastructure. The Government also plans to introduce national standards for the efficiency of vehicle emissions aimed at promoting newer and more efficient vehicles.
The Ministry of Energy informed the IMF about the steps he was taking to promote the new infrastructure. However, the Government has not yet had its final decision on the issue of carbon tax, the sources said.
Any commitment to the IMF on raising the new tax will be given after the consent of Prime Minister Shehbaz Sharif, government officials said. They said a clear image will arise at the end of this week.
The new IMF installation will also be directed to the gradual elimination of the electric tube, a gradual elimination of the natural gas subsidy for fertilizers production was carried out, implementing reforms in the sugar sector, such as eliminating entry barriers such as restrictions of License in new sugar factories and eliminate import duties and export subsidies for sugar, according to sources.
