It's not different from whether it's income or sales tax or use tax or excise taxes. "They need to have the technology to really deliver trust in the data, which is then the basis for tax. "The accounting profession needs to have expertise and standards," said Bricker. Emerging economies see it also as a way of raising revenue, largely raising revenue from outside their borders, so it's politically popular with their citizens."Īccountants will need to develop skills to account for carbon emissions, as groups like the recently formed International Sustainability Standards Board work to develop the proposed standards for climate and sustainability disclosures under the auspices of the International Financial Reporting Standards Foundation. In emerging markets, for example, there are 14 states in Mexico that have enacted or proposed carbon-based taxes. "It's part of transitioning the economy over time to alternative sources of energy. "I think it's one of several molecules which will receive focus," said Bricker. The move to include methane in the current Inflation Reduction Act, especially when it comes to pollution from natural gas and petroleum production, could be a kind of stealth carbon tax. has resisted the effort, at least since the 2009 climate package. The idea has even spread to Mexico, but so far the U.S. Other countries, especially in Europe, have been able to enact a carbon-trading scheme through the EU Emissions Trading System as a way to combat climate change, effectively putting a price on carbon dioxide emissions. The new Inflation Reduction Act may be a harbinger of such a carbon tax, at least when it comes to methane emissions, which are often overlooked when companies make commitments to a "net zero" goal on carbon dioxide emissions. Democrats had tried during the Obama administration to include a cap-and-trade scheme that would have put a price on carbon emissions as part of a larger climate package, the American Clean Energy and Security Act, but the effort stalled in the Senate after passing in the House in 2009. While there are no explicit taxes on carbon or methane emissions in the bill, some of the language may suggest a path there. It also would modify several provisions related to oil and gas leasing on public lands, requiring royalties to be paid for methane gas extracted from federal lands, including offshore land. Department of Agriculture's Natural Resources Conservation Service for conservation technical assistance as well as a program to quantify carbon sequestration and carbon dioxide, methane, and nitrous oxide emissions. But lesser known provisions may lead to a kind of tax on carbon and methane emissions for the first time in the U.S., or at least prompt accountants to get involved in tracking such carbon dioxide and methane emissions, as well as nitrous oxide. The Inflation Reduction Act that Senate Democrats managed to pass on Sunday and that is heading for an expected vote in the House on Friday includes a set of tax credits intended to incentivize renewable energy and the purchase of electric vehicles as part of a broad package for controlling climate change.
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