Nigeria should consider bringing in a carbon tax to help the country recover some of the revenues lost to falling crude oil prices, a notable economist said this week, according to local media.

Odilim Enwegbara, chairman and CEO of the Pan Africa Development Corporation, suggested that the government should examine new ways to raise funds besides increasing import tariffs and its value added tax.

According to This Day Live, Enwegbara said seeking other sources has become inevitable in an era in which oil revenues are no longer sufficient to meet the government’s budgetary needs or to fund much-needed investment in the Nigerian economy.

Enwegbara said the carbon tax could initially be imposed on automobiles via annual number plate renewal fees, and be based on a vehicle’s engine capacity.

“The full implementation of the carbon tax policy in Nigeria, as it is the case in most modern economies, should undoubtedly become government’s important source of non-oil revenue. Of course, as high as N1.2 trillion ($6.03 bln) should be the minimum annual revenue to be generated from the country’s automobile number plate annual renewal,” he said.

Crude oil prices have fallen by around 50% since last summer due to falling demand coupled with healthy supplies.

As a result, the IMF has urged Nigeria – a major exporter of oil – to curb its dependence on fossil fuel revenues and launch tax reforms as a way of finding other sources of cash.

By Mike Szabo – mike@carbon-pulse.com