Environmental Programs Ignored in MK3.5bn Carbon Tax Fund
It has transpired that the Treasury has not been remitting about MK3.5 billion carbon levy funds to the Ministry of Natural Resources and Climate Change for the implementation of different programs, four years since collection of the tax was introduced to increase domestic resources in environmental conservation in the country.
Treasury spokesperson Taurai Banda confirmed to Zodiak Online that the money is instead deposited into the consolidated Malawi Government Bank Account Number 1, making it part of the overall government resources for the national budget.
“Some necessary processes have not yet been completed to start channeling the money to environmental management programs. However, the Ministry of Environment is funded from the consolidated account for its activities. Thus, the ministry also benefits from this money,” said Banda in an interview.
The Treasury spokesperson further claimed the whole process is being handled in a transparent manner, indicating: “All revenues collected by the government are submitted to parliament. Also, the financial account of the government has details of all these monies. There is no secrecy with government funds.”
The country’s tax collector, Malawi Revenue Authority, commenced collection of the carbon levy from motorists on 25th November 2019.
At that time, motorists were paying the tax once a year in amounts ranging from MK4,000.00 to MK15,000.00 depending on cylinder capacity of a vehicle.
In January 2020, some officials from the tax collecting body told the Parliamentary Committee on Natural Resources that MRA had collected about MK452 million from both foreign and locally registered motor vehicles.
But from that time, no other information has been provided on both the carbon tax collection and the management of the funds.
When contacted, MRA Head of Corporate Affairs Steve Kapoloma disclosed that there are a number of bodies that are now involved in the tax collection exercise.
This, he said, has enabled the government to attach the carbon tax to fuel price to ensure that all petrol and diesel buyers pay the levy, not motorists only.
In 2020, the carbon tax on petrol and diesel was put at MK5/litre incorporated in the pump price.
Kapoloma could however not provide details of how the MRA and the other bodies are managing the carbon levy collection exercise when we contacted him several times in the whole month of May.
Meanwhile, the Ministry of National Resources and Climate Change is in need of such financial resources to implement climate related programs.
The ministry says only MK500 million has been transferred to its Climate Finance Management Account from the Treasury but this money has not yet been used.
“The levy goes to the Ministry of Finance. It is that ministry which is well placed to state how much has been collected so far. However, the Ministry of Finance has allocated MK500 million to our ministry,” said Frank Nkondetseni, Public Relations Officer for the Natural Resources and Climate Change Ministry.
He further disclosed that the ministry has concluded developing guidelines on the utilisation of the Climate Finance Management Fund, adding: “Very soon we will start using 70 percent of the carbon levy in funding community-based projects while 30 percent will be used for daily operations of the office. The ministry will advertise for project calls through the press.”
Nkondetseni agrees that the whole money on record as having been collected under the Carbon Levy, MK3.5 billion, was supposed to be deposited into the Climate Finance Management Account, but so far, MK500 million is the only money available in the account.
“The Ministry of Natural Resources and Climate Change is looking forward to the time when the whole carbon levy will be channeled to Climate Finance Management Account so that damage made on the environment can be restored and communities’ resilience can be built through numerous community-based interventions, with financial support from the account,” he said.
The current management of the carbon levy funds has since disappointed a number of stakeholders including the Parliamentary Committee on Natural Resources.
Committee Chairperson Welani Chilenga is puzzled that Treasury has opted to divert the funds from the intended purpose.
In an interview, Chilenga had no kind words for the Ministry of Finance, accusing it of generally lacking seriousness in funding environmental conservation programs in the country through the Ministry of Natural Resources and Climate Change.
“To them it’s business as usual. The most important ministry to them is that of agriculture. I don’t know what kind of agriculture we are having in this country without water? Without soils that are well conserved? Questioned Chilenga.
When asked to explain measures taken by his committee so far to resolve this matter, Chilenga claimed that proper guidance was provided to the Ministry of Finance but officials at the ministry choose to ignore it.
“We have been inviting Ministry of Finance officials several times over this matter. Malawians were told that they should be paying carbon tax to finance climate change programs but that money is going into account number 1.
“We have been telling them that they should channel that money to the Ministry of Natural Resources so that it can be used for mitigation of climate change, but they have not yet done that.
“For the past two years they have been telling the Ministry of Natural Resources and Climate Change to open a bank account, which they did. But still, they are not remitting the money to that account,” said Chilenga.
Executive Director for the Consumers Association of Malawi (CAMA) John Kapito says his organization has also been engaging a number of stakeholders on the use of the money but the efforts have now proven futile.
He said CAMA approached the Treasury and parliament for answers and now feels whatever could have been done to resolve this matter has been exhausted.
“We have not been given answers. This was a levy that was put on fuel without any mechanisms to ensure the money is accounted for. What we are seeing is a true reflection of what we did. When the money gets into account number one, there is very little that can be accounted for. It’s a challenge that even when you ask the authorities, there is nobody who is ready to respond,” said Kapito.
Civil society organisations working in environmental conservation are also weighing on the current situation.
Civil Society Network on Climate Change (CISONECC) National Coordinator Julius Ng’oma says while it is commendable that government decided to institute carbon tax with the objective of addressing environmental degradation and mitigating climate change, it is unfortunate that funds being collected are not channeled to the National Climate Change Management Fund but rather to account number 1.
“It is a missed opportunity for Malawi if the funds are not used to address environmental protection activities in the wake of climate induced disasters such as Cyclone Freddy. We all know the huge financial gap that is there when it comes to managing environmental degradation and climate change. Domestic financing through the carbon fund could have helped to bridge the gap and address the risks,” he said.