Taxes can directly influence and shape development policy, as demonstrated by environmental taxes. These taxes are designed to mitigate externalities—whether positive or negative—arising from production or consumption activities. Broadly defined, environmental taxes encompass levies on energy, transport, pollution, and/or natural resources referring as well indirectly to the sectors with high carbon emission. As pigouvian taxes, they can improve economic efficiency by correcting market failures when properly designed and implemented.

In ASEAN, where rapid economic growth coexists with efforts to transition toward low-carbon development, environmental taxes play a strategic role. All ASEAN member states have stipulated development planning for the attainment of this lowcarbon growth, that incorporate initiatives on carbon mitigation and adaptation, recognizing the regions’s vulnerability to natural disaster and the need for resilience economic systems (ERIA, 2022). Public sector policies, including taxation, can complement the regional initiatives in this aspect of low-carbon growth.

ID:

EN: