SINGAPORE - The impending carbon tax hike could bring about an increased cost of living for households over the next few years, if businesses decide to pass on their increased operating costs to consumers as they make their green transition, experts here told The Straits Times.
Acknowledging that the rise in carbon costs could lead to firms increasing the prices of their goods and services, Dr Broadstock noted that households may face a combination of the direct and indirect effects of the carbon tax. Mr Wong noted that a $25 carbon tax per tonne of emissions will likely translate to an increase of about $4 per month in utility bills for an average four-room HDB household. To support households, additional U-Save rebates will be given out to them during this transition.
He said:"With the tax imposed, the carbon-emitting industries will try to reduce their emissions to save on tax, such that the cost that is passed on to the consumer, will also be less. Secondly, when you put a tax on carbon, say for natural gas, it means that solar, which is cleaner, is going to become more attractive and viable."
However, economists also pointed out that the estimated increase in household utility bills at about $4 monthly will likely have"a very small impact" on most households. "Whether households will genuinely feel the impact will depend on the amount of increase but also whether firms can pass these additional costs to their users, which economists call tax incidence," he added.
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