ed Carbon tax on cars

Trade, Industry and Energy Minister Yoon Sang-jick said Wednesday that the government will reconsider its plan to impose taxes on motor vehicles that emit large amounts of carbon dioxide. “The Environment Ministry also thinks the ‘carbon tax’ plan has some problems,” Yoon said.

As we see it, however, there are few, if any, problems with the proposed plan, which calls for slapping charges on motorists who buy highly polluting vehicles, and offering subsidies for those purchasing relatively clean cars. The only problem is most of the gasoline-fueled, low-mileage cars are homemade, while high-mileage hybrid cars are imported, primarily from Germany and Japan.

“The plan goes against the equity because it is advantageous for imported autos and disadvantageous for locally produced cars,” Minister Yoon added.

To be sure, it appears to be problematic if the government penalizes the buyers of cheaper, low-mileage Korean cars, and uses the revenue for rewarding much wealthier people who buy expensive foreign models only because the latter group purchases high-mileage, less-polluting cars.

Minister Yoon might have thought he did what he should do as a top official responsible for the nation’s industrial competitiveness. But he was less than prudent in citing the “fairness issue” between local and foreign cars, because part of his portfolio is to ensure smooth trade ties with foreign countries. It would have been far better if he had left the matter to the environment ministry, which will review the plan’s specific targets and timetables while also considering its effects on the automobile industry.

Nor should industry lobbyists call for putting off its implementation beyond the scheduled January 2015 start, or cancelling it altogether.

Their strong opposition to the carbon tax plan also seems to reflect the global trend of backpedalling in reducing the emission of greenhouse gases, especially among industrialized nations. In the short run, strict regulations on carbon dioxide could hurt this country’s competitive edge. In the long run, however, the environmental efforts are for Korea and its industry. If the domestic automakers find no incentives to going green and remain content with the status quo, their cars will be crowded out of global markets not because of price but because of quality.

Korea is now the world’s eighth-largest emitter of greenhouse gases, the growth rate of which is highest in the world, a result of the nation’s breakneck economic growth over the past half-century.

Despite his numerous policy mistakes, former President Lee Myung-bak was right to call for “green growth” as Korea’s next growth engine, although Lee’s action more often than not did not match his words. In the same vein, President Park Geun-hye’s “ABL” (anything-but-Lee) policy is understandable, but the incumbent leader needs to inherit a few good policies of her predecessor, including environment-friendly economic development.

The domestic industry complains about “reverse discrimination” against homegrown carmakers. Domestic motorists might feel like asking: “Where were the policymakers when Korean carmakers discriminated against consumers at home in price and other benefits?”