Government: "In Response to Climate Change, Discussion on Measures Beyond Carbon Tax Is Necessary"

[Image source=Yonhap News]

[Asia Economy Reporter Park Ji-hwan] The government has expressed the position that alongside a carbon tax, which directly prices carbon emissions in response to climate change, other measures such as subsidies and support for new technologies should also be considered in a balanced manner.

According to the Ministry of Economy and Finance on the 12th, Yoon Tae-sik, Deputy Director-General for International Economic Affairs (Vice Minister), attended the G20 Finance Deputy Ministers and Central Bank Deputy Governors meeting via video conference and made these remarks. Deputy Director-General Yoon stated at the meeting, "In responding to climate change, it is necessary to discuss the impacts and pros and cons of not only taxes but also other pricing mechanisms such as Emissions Trading Systems (ETS), as well as non-pricing measures like subsidies and regulations, in a balanced way, considering the differentiated conditions of each country." This is interpreted to mean that in the domestic context, since companies are already bearing part of the carbon reduction costs through ETS and other mechanisms, measures should be devised to avoid double burdens.

Deputy Director-General Yoon also emphasized, "When imposing digital taxes, reasonable consideration is needed for B2B intermediate goods sectors, taking into account the original intent of the tax and the specific characteristics of intermediate goods industries." He expressed the position that reasonable consideration for B2B intermediate goods sectors is necessary when discussing remaining issues of digital taxes such as revenue attribution criteria and safe harbor provisions. This implies that additional decisions on final revenue attribution criteria are needed for intermediate goods like semiconductors. The safe harbor provision limits the scope of taxing rights allocated to a country if a company already pays taxes in the market jurisdiction.

The meeting was held in a hybrid format, both in-person and virtual, on the 9th and 10th in Bali, Indonesia. Representatives from G20 member countries and major international organizations such as the International Monetary Fund (IMF), the Organisation for Economic Co-operation and Development (OECD), and the World Bank (WB) attended. Member countries pointed out global supply chain disruptions as a common risk factor amid expanding global economic uncertainties caused by the spread of COVID-19 and rising prices.

The major issues agreed upon for next year will be detailed through discussions by sectoral working groups and announced later at the G20 Finance Ministers and Leaders' meetings. The first G20 Finance Ministers and Central Bank Governors meeting of next year will be held on February 17-18 in Indonesia.

This content was produced with the assistance of AI translation services.