No Taxation Without Climate Action

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ASEAN Beat | Environment | Southeast Asia

No Taxation Without Climate Action

As they grapple with COVID-19, Southeast Asian nations should not lose sight of the challenges posed by climate change.

No Taxation Without Climate Action

A village in Kampong Cham province, Cambodia, during wet season flooding in 2011.

Credit: Flickr/EU Civil Protection and Humanitarian Aid

More Cambodians, Laotians and Vietnamese have been killed this year by flooding than from the coronavirus pandemic.

Flooding in Vietnam has killed at least 36 people so far this month, up to October 14, a number that will most likely rise as Tropical Storm Nangka continues to batter the central provinces. Vietnam’s Central Steering Committee for Natural Disaster Prevention and Control estimates that another 93 people were killed by natural disasters between the start of the year and September 22, many when Tropical Storm Noul struck last month. That’s compared with 35 deaths from COVID-19.

In neighboring Cambodia, at least 11 people have died this month from flooding, in addition to more in previous months, compared with zero fatalities from the coronavirus, according to government statistics.

What are we to make of these figures? That lockdowns and the worst economic recession in decades were needless? Not at all, as coronavirus infection numbers could have been much higher in mainland Southeast Asia if not for serious government measures. Instead, it should retrain the eye onto the region’s long-term as well as short-term woes.

We are informed almost daily of a “new normal.” More accurate would be to say, “never normal again.” We may not return to how life was pre-coronavirus, in terms of social norms and economic activity, for several years. But we will certainly never return to the time when flooding and droughts were regular but predictable events, and when hundreds of thousands of people weren’t periodically washed out of their homes by unexpected storm surges, as has been the case this month in Vietnam

This isn’t an article detailing forecasts of climate change. The literature available on that is voluminous and comprehensive. The witting reader can quickly sink into nihilism about the future of the region after a few, quick searches on Google. Instead, it’s about how the people and governments of the region can respond.

Environmentalism is growing in the region. Some of the largest protests witnessed in Vietnam’s recent history came after the toxic oil spill of the Formosa steel plant in 2016, which destroyed waterways across several central provinces. I argued in this column back in 2017 that environmental degradation could be the Vietnamese Communist Party’s downfall. In Cambodia, we recently saw the country’s elite take part in a protest against plans to fill in a lake in one of Phnom Penh’s gated communities. The filling in of most of lakes and waterways, the natural overflows for the torrents that hit the capital, are a primary reason why flooding has worsened so much in Phnom Penh in recent times. Needless to say, the government “advised” these well-heeled protestors to quieten their complaints and allow the property developer to get on with its project. It is business, after all, that matters.

Indeed, all of the authoritarian governments of mainland Southeast Asia (that is to say, all five governments of mainland Southeast Asia) owe their legitimacy to providing constant economic growth, a torpid social contract wherein citizens agree to keep their noses out of politics if their governments guarantee their living standards rise ever-so slowly each year. The pandemic-induced economic crisis puts this legitimacy at risk.

Naturally, the response from all governments has been (and will continue to be) a return to rapid economic growth as soon as possible regardless of how it’s achieved. The GDP growth puritans of Southeast Asia have a point: Economic growth has significantly brought down poverty rates since the 1990s, but now tens of millions of Southeast Asians will be either thrown back into poverty or be prevented from climbing out of it because of COVID-19. The middle-classes will also suffer, as will the apparatchiks, who will pocket less corruption money as business activity slows.

An economic crisis is rarely the opportune moment for campaigning against long-term problems when short-term issues like poverty and unemployment are most glaring. (That is, except if one is glaring at the flooding and droughts inflicting most of Southeast Asia today, a sign the region’s climate woes aren’t looming in five or ten years’ time but now.) However, economic recovery does provide an opportunity for the region’s citizens to demand changes.

The pandemic has caused the region’s governments to dig deep into the state coffers. Thailand’s stimulus packages amount to more than 12 percent of GDP. Vietnam’s fiscal deficit is forecast to grow by more than 5 percent this year, pushing public debt much higher than last year’s 53 percent of GDP. Cambodia’s fiscal deficit could rise to 9 percent of GDP this year, compared to a fiscal surplus of 0.5 percent last year, according to the World Bank. Laos is the closest to default, with its debt servicing payments likely to soon exceed the country’s foreign reserves. In September, the country had to cede majority control of its electricity grid to a Chinese state-owned firm to appease creditors in Beijing. And, no doubt, another tranche of state investment from governments across the region will be needed next year.

Because of all of this, 2021 will be a year when the region’s governments fight to recoup their losses. And what better way to fill the depleted treasuries than through more taxation, which has been increasing across the region in recent years anyway? In Cambodia, tax collection rose by almost a third between 2018 and 2019 (excluding customs and excise) and increased by 9.6 percent in the first seven months of this year, compared with the same period in 2019.

I’ve argued in the past that the growing need for taxation could be seized on by the region’s democrats to demand political reform. (“No taxation without representation,” as the old revolutionary cry went.) Or, at least, it could lead more ordinary people to take a greater interest into how their hard-earned money is being spent by their governments (oftentimes corruptly and wastefully), which might increase demands for accountability and transparency.

Taxation now also provides an opportunity for environmentalists. When Southeast Asian governments come to demand even greater sums in taxation, a call should go up that this money must be spent sustainably and on green projects: “No taxation without climate action.” Greater attention needs to be paid to how state finances are going to fund economic recovery: what investments are being made, and do they exacerbate climate change?

Business leaders, who have more influence over the region’s autocrats than electorates, must also demands that their corporate taxes are being spent wisely. After all, companies as well as ordinary people stand to be impacted by flooding and climate change. Nithin Coca, writing in Nikkei Asia this month, noted that by 2050, 75 percent of global capital stock at risk from flooding will be in Asia. “Unchecked, climate change could shave 11 percent off [Southeast Asia’s] GDP by the end of the century,” the IMF has warned. “In the absence of technical breakthroughs, rice yields in Indonesia, the Philippines, Thailand, and Vietnam could drop by as much as 50 percent by 2100 from 1990 levels,” it indicated.

Yes, economies need to recover, but in sustainable ways. Indeed, it cannot be comforting to know that your hard-earned tax money is being spent on industries and projects that will make environmental disasters more common and more deadly. Wouldn’t you recoil at the thought of your taxes being spent on projects that increased the odds of another coronavirus-like pandemic? Well, they are going on projects that increase the odds of more fatal floods and droughts.