In Short : Taiwan’s decision to implement a carbon “fee” rather than a “tax” reflects a strategic approach to reducing carbon emissions while minimizing economic impact. The choice of the term “fee” suggests that the focus is on pricing carbon emissions to encourage industries and consumers to reduce their carbon footprint, rather than imposing a punitive tax.
In Detail : After years of debate, Taiwan has decided on using a carbon “fee” approach to curb carbon emissions that will be implemented starting in 2024. Most other countries have opted for a carbon “tax” (or cap-and-trade system) to address the issue.
So is there a difference between a carbon “fee” and carbon “tax” and will the system as presently conceived actually work?
Scholars said the “fee” and “tax” approaches vary mainly in how the revenues are used, and that the main issue — whether they actually cut emissions — depends on whether and how other measures are put in place to supplement the collection of carbon fees.
Taiwan has set a general outline of how its plan will work.
In late August, the Ministry of Environment announced that 512 companies that emit more than 25,000 metric tons of carbon dioxide a year will be charged carbon fees in 2025, based on verification of their total emissions in 2024.
As of mid-October, the fee that will be charged had yet to be announced. The government has hinted at an initial fee of NT$300 (US$9.32) per metric ton of emissions, which environmental groups have blasted as being far too low to attack the climate crisis.
A tax or a fee?
In many media, the terms “carbon tax” and “carbon fee” are used interchangeably. In either case, they are consistent with the concept of carbon pricing, which according to the World Bank is an instrument that helps “shift the burden for the damage from GHG emissions back to those who are responsible for it and who can avoid it.”
In Taiwan, a “fee” and a “tax” are differentiated by which agency collects the funds and how those revenues are used, according to John Chung-en Liu (劉仲恩), an associate professor of sociology at National Taiwan University who also is part of the school’s International Degree Program in Climate Change and Sustainable Development (IPCS).
Carbon “fees,” Liu told CNA, would be collected by the Ministry of Environment, while a carbon “tax” would be collected by the Ministry of Finance.
The tax revenues collected would go into state coffers for use in the general budget, Liu said. “Fee revenues, on the other hand, are designated for specific uses,” depending on which government authority collects the fee.