As part of the Asian Development Bank’s (ADB) Resource Mobilisation Reforms Programme worth $200 million, Pakistan has vowed to rework the framework for tax policies and administration so that they are more inclusive and productive. Part of this initiative is to implement a national carbon pricing strategy to incur a greater sense of social responsibility in the face of climate change. Pakistan is particularly vulnerable to this phenomenon—judging by the recent endless floods, heat waves and high smog levels—and a push in this direction is exactly what is needed.

The aim of the ADB is to help the government reform its tax policies to address pressing issues and mobilise the resources available, both domestically and internationally. Research and evidence-based policies will enhance revenue streams, the collection process and will enable these funds to be allocated for public goods and services. Part of what makes this a promising project is that it seems to be comprehensive in nature. It directs the use of third-party surveys to roll-out services for taxpayers for marginalised groups like women, the disabled, poor and religious minorities. Further propositions include a monitoring system for the pharmaceutical, petroleum and beverages industry, upgraded software architecture to include modules for taxpayer declaration, refunds, receipts and withholding statements as well as the establishment of a client-based reporting system.

Perhaps what is most appealing about this programme is its insistence on a carbon pricing strategy which basically entails putting a price on carbon emissions that emitters would have to pay directly. This means that there is a financial incentive to produce less, therefore limiting the impact of production on the climate. Perhaps what is best about this strategy is that it can be carried out in a number of ways; implementing a carbon tax, emission trading systems that place emission caps for certain sectors or a crediting system which allows companies to buy emission on a project-to-project basis. Of course this cannot be a stand-alone mechanism to tackle climate change, and it will also require transparency and strict regulation, but it is proven to be exceptionally effective.

The government must acknowledge the need for such policies as well as their merits; carbon pricing can allow it, as well as the public, to hold major polluters accountable for the increased risk of dangerous weather, higher temperatures, increased air pollution and countless other health threats. Our tax policy needs a change and these propositions have immense potential.