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Title Vol. 34 Discussion Trend on Carbon Tax (English Edition)

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• As the economic and social problems caused by global warming become visible, international discussions about reducing greenhouse gas (GHG) emissions are expanding.
• Korea has implemented an emission trading system (ETS) since 2015 but has not introduced an explicit ‘carbon tax’.
• This report explores the policy implications of the introduction and implementation of a carbon tax by reviewing domestic and international discussions on carbon taxes.
• Energy-related taxes, such as the transportation/energy/environment tax, are imposed in Korea, but their impacts on reducing GHG emissions are weak.
• In the 21st National Assembly, a bill to impose a carbon tax based on tons of carbon dioxide equivalent (tCO2e) to reduce GHG emissions (proposed by Rep. Yong Hye-In) is pending.
• 25 countries have introduced a carbon tax, and a carbon tax rate of up to US$119/tCO2e is being applied.
• Nordic countries have implemented both carbon taxes and ETS, but they have also taken measures (e.g., direct tax reduction and the reduction of exemption from tax on carbon for industrial use) to minimize double regulation.
• In Asia, Japan and Singapore have carbon taxes. Japan was the first to introduce a carbon tax in Asia by establishing a tax item called the “Global Warming Countermeasure Tax” in October 2012.
• France suspended a hike in its carbon tax rate, and Australia abolished its carbon tax two years after it was introduced in 2012.
• Each country’s experiences of carbon tax implementation indicate the need for discussion when introducing a carbon tax to minimize problems, such as a sharp increase in the tax burden, overlapping regulations with the ETS, and tax resistance.
• When introducing a carbon tax, it is necessary to listen to various opinions on topics, such as how to link the tax to the current energy tax system, consider the burden of industries with high carbon emissions, and supplement a regressive tax system.

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