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Uzbekistan has proposed introducing a carbon tax from 2028
The Institute for Reducing the Share of the Shadow Economy, Improving Tax and Customs Administration and Fiscal Analysis under the Ministry of Economy and Finance proposed to begin preparations for the introduction of a carbon tax for large industrial enterprises. The initiative waspresentedJuly 30 at the Fiscal Dialogue.
According to the institute’s presentation, the preparatory stage is planned to take place in 2027. It should include an inventory of emissions, determination of the tax base, rate and range of payers.
The tax itself is proposed to be introduced starting in 2028, first for the largest emitters. In the future, its effect may be expanded to other enterprises.
Two options are considered as the tax base: the actual volume of carbon dioxide emissions or the volume of carbon fuel consumed.
In 2029-2030, rates are proposed to be gradually increased according to a pre-announced schedule. Specific parameters of the tax are still under development. The fiscal effect is expected from 2028.
Why is tax needed?
The institute believes that a carbon tax will allow the cost of emissions to be included in the costs of enterprises. This should encourage companies to improve energy efficiency and reduce pollution.
Another reason is the development of international carbon regulation. Domestic emissions pricing could reduce the risk that Uzbek exporters will have to pay carbon fees abroad.
The proposal is analytical in nature and does not yet have the status of an adopted decision or draft law.
Back in 2020 "Newspaper"wroteon international experience in carbon taxation. The point of such a tax is to make it economically unprofitable to pollute: the more fuel households and companies consume and the higher their emissions, the more they pay. Those who reduce emissions and improve energy efficiency incur lower costs.
One example was given in Canada, where a carbon tax was included in the price of gasoline, natural gas and other fuels. At the same time, a significant part of the proceeds was returned to the population or used as subsidies for energy-saving measures. Such a model would reward those who pollute less and increase the burden on large fuel consumers.
In June 2024, Uzbekistan will be the first in the worldreceivedpayment from the World Bank for verified reductions in carbon emissions. For reducing emissions by 500 thousand tons, the country received a grant in the amount of $7.5 million, which in the future could grow to $20 million.
The payment was made withiniCRAFT projectaimed at improving energy efficiency, reducing energy subsidies and developing carbon finance mechanisms. Part of the funds is planned to be used to support families most affected by increases in electricity and gas tariffs.
The World Bank previouslynotedthat Uzbekistan could use carbon pricing, including an emissions tax or cap-and-trade, to finance the green transition and incentivize businesses to reduce pollution.
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