Any tax similar to a carbon tax does not make sense – Opposition Leader

Nov 14, 2015 News

In response to Minister of Governance, Raphael Trotman’s revelation that Government is currently considering implementing a tax similar to a carbon tax, Opposition Leader, Bharrat Jagdeo says that Trotman “is absolutely clueless

Leader of the Opposition, Bharrat Jagdeo

about these matters.”
Trotman had revealed the Government’s consideration in a recent interview with this publication. When faced with the question of how oil exploration synchronizes with Guyana’s position of being a green economy, he had stated that the two are not mutually exclusive.
“The government is currently looking at models around the world which shows that oil exploration and a green economy can be synchronized.”
Trotman had given the example of Norway which has through a combination of steep carbon taxes; careful management of oil wealth and innovative investments found a balance between a green environment and economic growth. The money garnered from their oil products are placed in a sovereign wealth fund named the “Pension Fund Global,” while all of its energy is run off of hydropower.
It was reported by the Guyana Chronicle in 2009, Bharrat Jagdeo had made a proposal to the Caribbean Community (CARICOM) for carbon tax to become part of the new global climate change regime. However, Jagdeo in a recent telephone interview, said that his administration had never tried to submit such a proposal to CARICOM as “it would not make sense.”
He stated that instead, the administration had intended to focus on a low carbon development strategy. As such, their mitigating actions to reduce greenhouse gases were confined to using renewable sources of energy such as wind, hydropower and solar. These, he said, would have mostly been small projects in areas such as Bartica and Wakenaam.
Jagdeo added that later on, his administration had planned to blend the country’s gasoline with ethanol. It would have been “like a 15-25% blend, but that was all we were doing on the mitigation side because our per capita emission is very very low,” said Jagdeo. “It’s about two tonnes per capita when the U.S is like 20 tonnes per capita. We are not required to do carbon tax or so, to lower our emissions as they are doing.”
Trotman said that the government is currently looking at a Trinidadian model of a tax similar to carbon tax which finances a “Green Fund.” He stated that if they choose to go in that direction however, Minister of Finance, Winston Jordan, would have to make the decision.
When asked whether Government will charge factories for their carbon emissions, Minister of Finance, Winston Jordon said that he would not be able to say at this time.
Jagdeo said that Guyana does not have to implement carbon taxes or any similar tax as “we are not an annex one country. Trotman is probably is mixing things up,” with relation to Trinidad’s green fund and labeling it as being similar to a carbon tax as it is not.
“Trotman chooses concepts and throws them out in the public without understanding the full implications of these issues or concepts themselves. We never planned to put in place a carbon tax as it would have been unnecessary. It would make our businesses uncompetitive. We are already getting funds from abroad for the help with mitigation. Nowhere, never once in our policy did we try to do that as it’s not part of our low carbon development strategy,” said Jagdeo.
When the Kyoto Protocol was signed, annex one countries such as Canada and the United States of America were provided with a target of reducing their carbon dioxide levels by 18 per cent by 2020. However, most developing countries such as Guyana do not have targets to meet since their carbon dioxide emissions are very low.
Currently, said Jagdeo, there are two ways in which developed countries meet their required target. These are carbon taxes and cap and trade systems. One is market based while the other, is a government imposition.
“Countries like ours,” he stated should not put in place carbon taxes or anything similar now as it will make the cost of doing business more prohibitive.
“Just imagine we have a carbon tax and let’s say Trinidad doesn’t have it, our manufacturers would have to pay the gasoline price plus the carbon tax. Their cost of production will go up and they will still have to compete in the same market with the goods from Trinidad and Tobago which has no carbon tax and will be able to subsidize their fuel,” said Jagdeo.
He went on to say that there are several models around the world of a sovereign wealth fund in which oil wealth is stored. He pointed out that he is in favor of the Norwegian model as it is very rigid and cannot be manipulated by Government. This would prevent the dreaded Dutch disease which could possibly see us becoming a mono-sector, he said.