At the Central Asia Regional Economic Cooperation (CAREC) High-Level Policy Dialogue on Mobilizing Taxes for Development and Decarbonization held on 14 February in Georgia, Asian Development Bank (ADB) Director General for Central and West Asia Yevgeniy Zhukov said the region needs reliable domestic revenues and mitigation policies to protect itself from external shocks and climate-related vulnerabilities.
“It is essential for CAREC policymakers to strengthen the region’s tax systems to fund critical infrastructure and social spending while tackling climate change,” he said. “In the two decades before the pandemic tax revenue rose in most CAREC countries, but the COVID-19 profoundly affected government finances. Countries need substantial and predictable revenue streams to achieve strong and sustainable growth, while leaving no one behind and preparing for future crises.”
Mr. Zhukov emphasized that carbon taxation can be an important tool to help CAREC countries meet their Nationally Determined Contributions (NDCs) to achieve the Paris Agreement, while raising climate awareness and ambition. Carbon taxation revenue can be earmarked to promote low-carbon technology, renewable energy, and energy efficiency, or to address environmental damage.
“Carbon taxation holds great promise even as many design considerations and challenges will need to be managed. CAREC can draw valuable lessons from the early adopters – to strengthen design and implementation, amplify the benefits, and minimize costs,” he said.
High-level representatives from CAREC countries, Deputy Ministers of Finance, senior representatives from ADB, the International Monetary Fund (IMF), and the World Bank gathered at the high-level policy forum to share experiences and lessons learned in mobilizing domestic revenues, designing efficient and equitable tax policies, and to discuss challenges and opportunities in implementing carbon taxation.
The CAREC Program is a partnership of countries and development partners working together to promote sustainable development. It facilitates practical, results-based regional projects and policy initiatives to accelerate economic growth and reduce poverty in the region. ADB hosts the CAREC secretariat.