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Published:  29 December 2019

https://dailyasianage.com/news/211509/natural-resources-tax-in-bangladesh

Natural Resources Tax in Bangladesh--- M S Siddiqui

The world economy expanded sevenfold in the past one hundred years. Global population increased from 1.6 billion to 6.5 billion. The economic activities for development have damaged the environment.

The inhabitants of this earth have realized the gravity of the situation and are trying to save the earth in different manners. The rapid growth of the world economy is straining the sustainable use of the Earth's natural resources due to modern society's extensive use of metals, materials and products.

But the benefit of development goes to a small population, only some 20 percent of humankind enjoy the full benefits of the present economic model. Globalizing the traditional model of economic growth is rapidly increasing the extraction of limited natural resources, thus augmenting ecological disruption.

The major rest of population are poor and even suffer the consequences of its flaws. Rising global over-use of natural resources such as metal ores, fossil energy carriers, biomass, non-metallic minerals, water, and land surface are affecting the life-sustaining ecosystem services of the earth, which are a prerequisite for human life, and are not replaceable by technical means.

To some degree, different world regions face specific problems resulting from global over-use of natural resources (UNEP 2007). Climate change, widespread water shortages, desertification, massive erosion and increasing natural disasters show that several of the environment's safety thresholds have already been surpassed. The failure or collapse of ecosystems are much the same as for economic systems.

These resources are renewable and non-renewable in character.  Renewable resources are those that can generate a continuous flow of output for an indefinite period of time. They include such things as fisheries, forests, hydro-electricity, water supplies, clean air and agricultural land.

In each case, as some of the resource is taken for economic use, the resource can replenish itself by natural or artificial means. A characteristic feature of renewable resources is that the level of flow of resource that can be sustained is an endogenous variable. Non-renewable resources are those such that, in principle, there is a fixed amount available for use.

Two types are industries account for the most important non-renewable resources hydro-carbonic fuels (oil and gas) and mining. Global resource extraction grew from 40 billion tons in 1980 to about 55 billion tons in 2002 and is expected to grow to 80 billion tons by 2020 (OECD, 2008).

An astute and conscious application and use of metals, materials and products supported by the reuse and recycling of these materials and end-of-life products is imperative to the preservation of the Earth's resources. The realization of the ambitions of sustainable use of metals, materials and resources demands that the different disciplines of the material and consumer product system are connected and harmonized.

One of the key characteristics of natural resources is the fact that they generate economic rents or economic profit from its exploitation. For a non-renewable resource such as a mine, the accrued revenues result from the final sale of the mineral to a user.

The accrued costs include all the current and capital costs associated with exploring for the mineral, developing the mine site, extracting the ore, and1 processing it to obtain the mineral in usable form. The global community has many preservation and protective measures to judicious use of limited natural resources and renewal protection and research on development of minimum use and alternate to natural resources.

They are restricting the extraction of natural resources like waters and  the release of polluting substances into the atmosphere or bodies of water. Now a days the sale or import of goods and products harmful to the environment are subject to many restriction and administrative approval for use of these types of natural resources.

Bangladesh does not have remarkable natural resources except Gas and some coals but has waste disposal problem. Waste disposals include landfills and waste dumps, sewage and sewage treatment, waste disposal in water bodies and disposal of waste oil.

The way in which the waste is handled and disposed off can affect the formation and release of dioxins. Landfill and waste dumps are a common practice in Bangladesh. These cause leach ate and contaminate the soil and water.

Conservation rule and National Water Policy have adequate clauses relating to industrial pollution. This includes water quality protection, effluent discharge monitoring, zoning regulations for new industries and strengthening of the regulatory system for agrochemical pollution control.

Many countries imposed natural resources tax to can be a way of conserving limited resources and promote economically efficient use of natural resources. This avoids the waste and emissions associated with extraction of raw materials and with the processing of products made from the natural resources.

This discouraging tax expenses may restrict pollution of the environment, reduce manufacturing and sale of environment polluting substances, promote implementation of new, environment-

friendly technology, support sustainable development in the economy, as well as to ensure environment protection measures financially.

The taxes are calculated according to tax rates for a unit of natural resources or pollution. The tax shall be paid for the actual amount of the extraction of natural resources and environmental pollution.

The tax policy has rebate benefit for efficient use of resources and also for decrease of environmental pollution or consumption of natural resources by carrying out technological improvements or measures of environmental protection.

These tax revenues may be utilized only for the financing of such measures and projects which are directly related to the protection, restoration, re-cultivation of the environment, recycling or processing of environmentally harmful waste, research or renewal of natural resources.

In Sweden, a tax on natural gravel was introduced in 1996. The aim was to promote the use of crushed rock and recycled materials such as concrete, instead, as supplies were becoming limited in parts of the country. Although the tax encouraged substitution with other materials, the tax is applied uniformly across the country, even in regions where shortages in natural gravel is less of a problem and the importance of natural gravel as a ground water reservoir material remains limited.

In Denmark, a new tax on extracted raw materials such as sand, gravel, stones, peat, clay and limestone were introduced in 1990 in conjunction with a waste tax, to reduce the use of these natural materials and to promote the use of recycled products, such as construction and demolition waste.

The combined aggregate and waste taxes have produced a greater demand for recycled substitutes: in 1985 only 12% of construction and demolition waste was recycled, compared with 94% in 2004. The Danish model of sorting construction and demolition waste at the source is an effective strategy of increasing the supply of recycled material, according to the study.

In the UK, a tax on aggregates (sand, gravel and crushed rock used in construction) was introduced in 2002, primarily to reduce the environmental impact of quarries. However, this tax is considered to be a relatively inefficient way to reduce the environmental impacts of quarrying.

Taxing aggregates can have mixed results, in particular when the tax is used to address multiple environmental problems; it would be better to target each problem explicitly. In addition, site-specific conditions have a major influence on the environmental impacts of quarrying and although a uniform tax may reduce overall demand, it does not necessarily change polluting behavior. Despite this, the high tax rate has encouraged a higher recycling rate in the UK.

There are share of rents to the public sector: two justifications for this: (1) the efficiency-based argument that a tax on resource rents is non-distorting and complementary, and (2) "equity" argument that the property rights to resources ought to accrue to the public at large rather than to private citizens since the rents resources represent the bounty nature has best owed on the

economy rather than a reward for economic effort. This can be viewed as a sort of equity argument.

Developing country governments have become increasingly conscious of the desirability of levying taxes on economic rents arising from natural resources occurring within their boundaries. Many of the multinational companies from developed countries involved in exploration and extraction of resources in developing countries.

These foreign companies shift profits through transfer pricing and other means. The resource tax will limit the extent to which some types of taxes on resource rents will be effective.

We may consider natural resources tax on almost free use to ground and surface water and also to combat water pollution but recently developed Textile and other industries. These tax money may be used to water treatment plants in industrial clusters and provide 'free service' to industries.

The writer is a legal economist. Email: shah@banglachemical.com