Carbon tax- a future reality

Companies have to constantly keep a watch out for probable taxes which could be levied on them, what with most Govt’s worldwide grappling with revenue collections. In the developed countries, many companies with foresight have already envisioned a new tax which could become a reality in the near future – climate related carbon taxes.

Shell has already started budgeting for carbon taxes when it prepares its Budgets. And taking cue, some 11-12 more companies, five of which are oil companies have also started planning their future growth on the expectation that the government will force them to pay a price for carbon pollution. The financial plans of ExxonMobil Walmart , Microsoft, General Electric, Walt Disney, ConAgra Foods, Wells Fargo, DuPont, Duke Energy, Google, Delta Air Lines and American Electric Power, have started incorporating a price on carbon.

Those advocating the tax say that if this tax is levied, companies will pass on the cost to the consumers, who will turn will start curbing their power/energy consumption. On the other hand, those who are against this tax, say that it could hurt the industry really bad and instead of levying a tax, maybe the Govt should start rewarding companies with a tax offset, equivalent to the carbon footprint they have managed to reduce. Thus those who live more environmentally friendly stand to have a tax reduction for their efforts. Well, the debate rages on but the fact is that this carbon tax is not very far off and could become a reality soon. Will India also toe the line of these developed countries?