Sri Lanka Environment Levy Bill: Politics of Adaptation Fund

Global climate politics is finally at home. The much-controversial Environmental Conservation Levy Bill passed without a debate in the Sri Lanka Parliament on April 9, 2008. According to Environment Minister Champika Ranawaka, the Bill is based on the ‘polluter pays principle’. While the tax itself is not justified in the Bill, the question remains: why is the levy charged for electronic items, phone bills, and electricity bills for the climate adaptation Fund? 

The polluter pays principle is the principle according to which the polluter should bear the cost of measures to reduce pollution according to the extent of either the damage done to society or the exceeding of an acceptable level (standard) of pollution. The energy-guzzling industries that emit large amounts of greenhouse gases (GHG) are the sole responsible for climate change. As the impacts of climate change are transboundary, these industries must be put under review. Thus, at the local level, big industries must pay a tax to cover the adaptation to climate change. 

At the international level, Sri Lanka's current emission level, which is around 600 kilograms, is low compared to the global per capita carbon threshold of 2,200 kg. This means Sri Lanka can still increase the per capita emissions. Carbon footprint in the US, Australia, Canada, neighbouring India, and China are very high. These countries must pay the adaptation bill for damaging the poor countries by emitting large amounts of GHG. Taxing the poor in a low-carbon economy for using phones and electricity is unlikely and unacceptable. Suppose the local people pay the adaptation bill. Will we tax those who use firewood cooking, brick kilns, farmers who release methane, or the local authorities who let garbage dumps be unmanaged? Are we going to distinguish between luxury emissions and survival emissions? 

It is a well-accepted fact that all electronic devices, such as computers and mobile phones, to name a few items, produce a lot of pollution. To deal with such electronic waste (e-waste), certain countries have adopted Extended Producer Responsibility (EPR), which charges a small percentage of the fee from the user and a higher percentage from the producer or the agent. At the same time, they have established a system of collecting, sorting and recycling mechanisms to ensure the proper use of the funds generated from the EPR tax. South Korea is one good example in the Asia-Pacific.

However, the Sri Lankan government’s controversial bill does not provide such a mechanism. We have been communicating with the Central Environmental Authority (CEA) since 2004 to bring such legislation under the National Environmental Act 1980. Since three Chairman and two ministers have been at the helm of affairs, no legislation 

The larger question is, what will the social cost of this bill be? Although electronic devices are not environmentally benign, they reduce travelling time and space and improve information communication. Modern technology has literally reduced the inaccessibility to faraway villages, which was a dream a decade ago. The proposed tax on mobile phones and television in the Bill has a huge potential to create adverse impacts on communication, including access to information, which is a constitutional right.

The polluter pays principle does not stop pollution. It distributes the external cost of pollution among society through the market principle. This business-friendly principle makes the poor, who are marginalized and excluded from development, suffer more.

However, even if the Ministry respects the Polluter Pays principle, why are industries polluting large quantities of water or air not being taxed properly? The principle should start with the big polluters and not with the end users. 

Concern remains about how this will be imposed on society. It is common knowledge that there was no public consultation on the feasibility and approach of this Bill. As we learned, there was also no debate in the parliament. 

Today, environmental politics has become the biggest threat to the environment and the social safeguard of the people. Instead of consulting with environmental experts, the government looks to poorly equipped economists who make social and ecological decisions. Minister Ranawaka is not new to environmental issues. However, the levy seems based on flawed principles and is cluttered with some government authorities' financing projects. The bill's Rs. 1,000 million target is the pointer to a new environment business in the tiny Island country.