Chile becomes first South American country to tax carbon

The Thomson Reuters Foundation via Reuters: President Michelle Bachelet of Chile enacted new environmental tax legislation on Friday making the country the first in South America to tax carbon dioxide (CO2) emissions. Part of a broad tax reform, Chile's carbon tax will target the power sector, particularly generators operating thermal plants with installed capacity equal or larger than 50 megawatts (MW).

These installations will be charged $5 per tonne of carbon dioxide (CO2) released. Thermal plants fueled by biomass and smaller installations will be exempt. The new tax is meant to force power producers to gradually move to cleaner sources to help reduce the country's greenhouse gas emissions and meet its voluntary target of cutting these gases 20 percent from 2007 levels by 2020.

Earlier this year, Mexico imposed a tax on the sale of several fossil fuels, based on their carbon content, averaging $3 per tonne of CO2. In Mexico, companies are able to use carbon credits to reduce their tax bills, a provision not considered in Chile.

Central-American country Costa Rica also has an environmental tax, but it targets gasoline sales. Around 80 percent of Chile's energy is based on fossil fuels, mostly imported oil and coal....

Santiago's skyline, shot by 3BRBS, Wikimedia Commons, under the Creative Commons Attribution-Share Alike 3.0 Unported license 

Pakistan plans to impose 15 percent flood surcharge on tax

Sahar Ahmed in Reuters: Pakistan will impose a flood surcharge of 15 percent on income tax in order to tackle the country's widening budget deficit, a government source involved in talks with the IMF said on Wednesday. "Yes, we plan to impose the flood surcharge," the source told Reuters, declining to give details of when the surcharge might be levied.

Pakistan, whose tax-to-GDP ratio is around 10 percent, one of the world's lowest, is trying to show the IMF and other donors that it is working on ways to boost revenue. The country is dependent on foreign aid, and riven with political instability and violence. On Wednesday, gunmen shot dead the only Christian in Pakistan's government, the second top official killed this year for questioning a law that mandates the death penalty for insulting Islam.

The struggling government, still contending with damage from disastrous floods last year, is desperate to raise money. According to news reports, as well as the flood surcharge, it plans to increase a special excise duty by 150 percent soon after a National Assembly recess….

Australia imposes new tax to fund flood recovery

James Grubel and Rob Taylor in Reuters: Australia imposed a temporary new tax on Thursday to help fund a multi-billion-dollar rebuilding program after floods devastated infrastructure and ruined thousands of homes and businesses across the eastern seaboard over the past month.

The floods shut coal mines, ruined crops, washed away roads and rail lines, damaged bridges and destroyed thousands of buildings across three major states, killing 35 people and causing damage estimated at up to $10 billion or more.

Prime Minister Julia Gillard announced a new income tax to raise A$1.8 billion, at a rate of 0.5 percent on annual income exceeding A$50,000 ($49,900) and 1 percent on income over A$100,000. Flood-stricken households are exempt.

…Gillard said the national government would also curb spending on other areas to help patch up its budget, which faced flood costs of around A$5.6 billion. The governments of flood-affected states will also contribute flood recovery funds…