Confusions over green tax

Confusions over green tax THE Danish government is all set to paint the country a vibrant green. It plans to impose a set of "green taxes" which will encompass both the industrial sector and the consumers. While it is not likely to take much of a toll on the latter, it seems the corporate world is in for a major jolt. They will be saddled with hefty taxes on carbon dioxide emissions. The government claims that it is required to enable the nation honour its commitment of cutting down carbon dioxide emissions by 20 per cent between 1989 and 2005.

The government of Denmark seems to have little choice. According to officials, carbon dioxide reduction requires an average tax on long-term emission at about 6 times the present tax level. Of course, they admit that it is impossible for the the tax to hit the desired target at one go. Also, the business pundits predict that this sudden hike in the taxes might spell panic and disaster for the economy of Denmark. Thorkild Juul Jensen, Chairman of the Association of Process industries, expressed the fear that industries which are intensive users of energy, like the oil refineries, chemicals and the paper industries, may flee the country to avoid tax payment. If they try to shed some of the tax load on the consumers they might lose their competitiveness.

The government, however, claims that it has a viable solution up its sleeve. It plans to effectively recycle the revenue to the companies so that the latter still have an incentive to save energy, without the tax actually affecting their total costs. But this arrangement had few takers. The industrial houses argue that despite the idea of reimbursements, their competitive capacities in the international market is bound to suffer.

Meanwhile, lawyers who are specialising in European Community (EC) laws are openly sceptical about the ambitious "green tax programme". They claim that the proposed reimbursements will never be accepted by the EC, as the Commission will count them as mere subsidies.

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