Analysts have chimed in to say that Budget 2022 to be unveiled by the Minister of Finance Tengku Zafrul on Friday should consider having carbon taxes as a way of offsetting the shortfall in revenues.
It is believed that the carbon taxes to be imposed would, although invariably not just bring in additional revenues but also mitigate the impact of climate change, health problems, and water pollution.
In addition, the decision to impose the tax would bode well with investors and that would ensure that Malaysia would be able to have a large number of foreign direct investments (FDI ) into the country.
Analysts have also said that the gradual transition that Malaysia makes towards green investment was in tandem with global plans to reduce greenhouse gas emissions.
It is believed that the green infrastructure, which increases resilience to environmental challenges with the contribution of green technology comes from five sectors, that is, energy, transport, building, waste, and water
They have said that the government should use this opportunity and introduce a landmark budget that would help to ramp up public healthcare facilities. Public healthcare spending at 2% of GDP currently must be increased progressively to at least 4%.
Singapore is the first country in Southeast Asia to introduce a carbon tax. The carbon tax, at S$5 per tonne of greenhouse gas emissions (tCO2e), was introduced in 2019 through the Carbon Pricing Act (CPA).
The carbon tax is designed to incentivize emission reductions across all sectors and support the transition to a low-carbon economy.
There are 27 countries with carbon tax implemented among them are Argentina, Canada, Chile, China, Columbia Uk and New Zealand.
It is believed that by placing higher taxes on carbon-based fuels, households and industries can reduce the level of pollution or look to alternatives like solar power and hydrogen engines, which would have a positive impact on the environment.