SG Budget Reactions: On carbon and diesel tax

THE Singapore government will implement a carbon tax on the emission of greenhouse gases from 2019, said Finance Minister Heng Swee Keat on Monday.

The plan is to have a tax rate of between S$10 and S$20 per tonne of such emissions, which is within the range of what other jurisdictions have implemented.

Mr Heng also said a volume-based duty on automotive diesel, industrial diesel and the diesel component of biodiesel will be introduced with immediate effect to encourage users to reduce diesel consumption.

Isabella Loh, Chairman of the Singapore Environment Council (SEC):

"Putting a price on carbon is the most efficient and cost-effective way to meet this commitment.

"Over the long-term the carbon tax could transform the Singapore economy by encouraging industries to be more energy efficient which could lead to a further reduction in pollution.

"A carbon tax could act effectively as a catalyst for innovations in the development of clean energy sources, as well as in other industry sectors like transport and building. We urge the Government to consider channelling the revenue raised by the carbon tax into promoting this innovation."

Chiu Wu Hong, Head of Tax at KPMG in Singapore

"One interesting announcement in Budget 2017 is the introduction of carbon tax and the change in diesel tax to one based on usage. The message is clear - we need to keep pace with international standards on environmental sustainability. It is also a good gesture for the Government to provide some rebates in road tax in the interim for car owners impacted by the car taxes."

Toh Boon Ngee, Tax Partner at KPMG in Singapore

"The introduction of carbon tax and diesel tax changes is not unexpected for a sophisticated and developed economy. UK, for example, has long been having environmental taxes to help address environmental issues more effectively. The introduction also signifies the need for a modified tax structure and a gradual shift of tax base, from the traditional direct tax system to one with more targeted indirect taxes to help achieve more desired effects."

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