Low-lying Marshall Islands and Solomon Islands seek CO2 ship tax
THE Marshall Islands and the Solomon Islands have proposed that the UN's International Maritime Organisation (IMO) impose a levy on carbon emissions by ships, reports Hellenic Shipping News Worldwide
20 April 2021 - 19:00
The proposed levy would be imposed at a rate of US$100 per ton of carbon dioxide emitted, and would come into effect by 2025, with a potential increased rate over time.
Although other carbon tax proposals have been made in the past (including a proposal by the IMO itself), the Marshall Islands and Solomon Islands proposal is notable in that it is a 'country-led' carbon tax plan explicitly addressing shipping, said the report.
The shipping industry has been focused on transitioning to a more environmentally conscious model of fueling ships by reducing greenhouse gas emissions such as carbon dioxide, methane and nitrous oxide, said London law firm Watson Farley & Williams LLP that has forwarded the proposals.
'The Marshall Islands and the Solomon Islands are low-lying island nations, particularly vulnerable to the rising of the ocean caused by global warming, and therefore have a strong vested interest in moves to limit greenhouse gases. The Marshall Islands?? participation is noteworthy, in that they are also home to the world??s third-largest shipping registry,' said the law firm's brief.
'While the precise mechanics of a carbon tax remain uncertain, it is likely that each shipowner or other interested party would self-report the amount of carbon dioxide emissions by the relevant vessel over the relevant period, and the tax would be assessed on such reported amount,' said the brief.
'Reports could be made and taxes paid after each voyage, or after the last voyage in a given year or other time period. Issues such as monitoring, auditing, compliance and penalties for underpayment or failure to report remain to be addressed.
The IMO would be charged with collecting and disbursing the tax. The Marshall Islands and Solomon Islands have suggested that at least 51 per cent of the tax revenue raised go toward climate change adaptation and mitigation costs,' said the brief.
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