Response by SM Teo Chee Hean in Parliament on Carbon Tax

SM Teo Chee Hean | 1 February 2021

Response by Senior Minister Teo Chee Hean on carbon tax in Singapore. He was speaking in Parliament on 1 February 2021.


Thank you, Mr. Speaker.

I had not intended to speak on the subject, but after listening to so many speakers, I am truly gratified at the support for environmental action and climate change that is coming from all sides of this house. As the Chairman of the Inter-Ministerial Committee on Climate Change (IMCCC), I have never seen such overwhelming support in so many years and I am glad that it is so forthcoming.

I would like to make one clarification on carbon tax because there seems to be a fundamental misunderstanding, even among normally well-informed Members of this House, on carbon tax in Singapore. There has been a comment that the carbon tax in Singapore is very narrowly focused and only affects a few industries. In fact, the carbon tax in Singapore is one of the most comprehensive in the world. If one looks at it, you can see that we have chosen to apply the carbon tax at key nodes of carbon emissions in Singapore so that this tax will flow through evenly to the rest of the economy. This makes the implementation of the carbon tax and the administrative load on companies, especially small and medium enterprises (SMEs), very low. By selecting these key nodes and applying the carbon tax there, for example the power companies and the key emitters in industry, we have been able to cover 80% of emissions in Singapore, and this is an extremely effective way of doing so. The remaining 20%: the highest proportion of the remainder actually comes from transport fuel emissions, which are already fairly substantially taxed in Singapore. So our coverage is even higher than 80% when one talks about the carbon tax coverage. I just wanted to make this clarification so that there is no misunderstanding in this house about how we have implemented the carbon tax.

In fact, I am very gratified that many members have made very strong arguments for a comprehensive and even carbon tax that is applied across the whole economy as a very effective way of implementing carbon emission controls. In fact, a number of members have advocated substantially higher carbon tax rates than we are applying today, and I hope that this will smoothen the passage of any such measures in this House when they are discussed in the future.