Carbon tax likely to be raised to S$10-15, but rate needs to be higher to drive change: watchers

Sharon See

Published Mon, Feb 7, 2022 · 03:53 PM

Singapore Budget 2022

SINGAPORE is likely to raise its carbon tax to a previously-announced rate of S$10-15 per tonne with effect from 2024, but there could be mounting pressure for a steeper hike as the urgency of the climate crisis grows, watchers told The Business Times.

"The pressure is definitely on to frontload more in the future years. Even the carbon credit offset market price is higher than S$10-15," said OCBC chief economist Selena Ling.

The Republic in 2019 became the first country in South-east Asia to impose a rate of S$5 per tonne on firms that emit at least 25,000 tonnes of carbon dioxide equivalent (tCO2e) greenhouse gasses.

The rate, applicable for 5 years, is expected to net about S$1 billion in revenue, although Ajay Kumar Sanganeria, partner and head of tax at KPMG Singapore noted that environmental taxes are generally introduced as "a mechanism to change the behaviour…