| dc.description.abstract | The object of this paper is to examine Egypt's need for enforcing a
carbon tax, and to specify the requirements for its implementation if
deemed necessary. The paper begins by defining the carbon tax, and
presenting the causes for its application. It also examines the expected
impacts of this tax, its design and its optimal rate. Some country
experiences with carbon taxes are reviewed as well.
The paper concludes that it is necessary for Egypt to apply a carbon tax,
provided specific conditions prevail, because it would assist in the
mitigation of climate change and enhance public revenues. Though the
tax may impact economic growth and global competitiveness negatively
in the short run, it may affect sustainable development positively in the
medium and long run. The tax may have unfavorable consequences for
low income groups, but they may be alleviated at least partly by
redistributing some of the proceeds of the tax in favor of these groups.
Some difficulties are expected in applying a carbon tax in Egypt. To cope
with such difficulties, it is necessary to gather precise and sufficient
information regarding the volume of greenhouse gases emissions in
Egypt's atmosphere and to accurately determine their maximum
permissible levels. It is also necessary to carry out careful studies for
determining the proper tax rate and for assessing its effects on the various
population groups and the probable fall in fuel consumption and
greenhouse gases emissions.
The paper argues in favor of proceeding gradually in enforcing the tax,
using differential tax rates across sectors and population groups, and
complementing the carbon tax with other measures such as incentives for
renewable energy producers and consumers and raising taxes on the
owners of high fuel consumption vehicles. Finally, it is important to make
the public aware of the need for a carbon tax, and to choose the right
timing for its implementation | |
