🇱🇰 Green Taxation: Paving the Way for Climate Resilience & Fiscal Strength 📈

Sri Lanka faces critical economic and environmental challenges, exacerbated by climate shocks like Cyclone Ditwah. Green taxation emerges as an essential fiscal tool to both reduce environmental harm and build resilience. • What it is: Green taxation integrates environmental responsibility into the tax system by pricing pollution and resource use. It aims to steer businesses and households towards greener choices, supporting fiscal recovery while curbing degradation—a threat to food security, tourism, and public health. This also positions Sri Lanka to attract green investment. • Current Gaps: Sri Lanka's progress is slow due to: • Low public awareness and misunderstanding. • Varying industry readiness, with some export-oriented manufacturing adapting while domestic industries lag. • Fragmented, outdated, and weakly enforced environmental taxes. • Weak monitoring systems for emissions and pollution. • Global Insights: Successful models from Sweden (carbon tax), Japan (vehicle incentives), Singapore (plastic/waste taxes), and Germany (eco-taxes for renewable energy) highlight the importance of gradual introduction, transparent communication, and reinvestment of revenue. • Potential Risks: Challenges include a regressive impact on low-income groups, competitiveness concerns for small businesses, enforcement gaps, public resistance, and potential misuse of revenue. Thoughtful design and public engagement are crucial. • Way Forward for Sri Lanka: Key steps include: • Introducing a National Green Tax Policy Framework. • Phased, sector-focused rollout (e.g., plastics, transport, construction, energy). • Ensuring revenue transparency by earmarking funds for climate action (e.g., renewable energy, climate-resilient agriculture). • Supporting industries with green transition financing. • Strengthening data systems and monitoring technology. • Launching nationwide awareness campaigns. • Continuously learning from global best practices. Inaction is an expensive choice. A well-designed green tax framework can be a national shield and a springboard for long-term resilience, turning climate risks into opportunities.