The Indian government has recently communicated plans to implement a “green tax” on ageing vehicles. This move aims to discourage the use of vehicles that are polluting and contributing to the country’s air quality concerns.
Details About the Green Tax
As per the announcement by the Ministry of Road Transport and Highways, vehicles over eight years old will be subjected to a green tax when renewing their fitness certificate. The tax will vary between 10% and 25% of the road tax. Collections from this tax will go into a separate account strictly for addressing pollution issues.
Tax Exemptions and Differential Taxation
Certain vehicles, such as strong hybrids, electric vehicles, vehicles running on alternate fuels like CNG, ethanol and LPG, and farming vehicles like tractors, harvesters, and tillers will be exempt from this green tax. The green tax will also be applied differentially. Personal automobiles will be subject to the green tax upon renewal of their registration certification after 15 years. Public transport vehicles, including city buses, will face a lower green tax, while vehicles registered in highly polluted cities will receive a higher tax, up to 50% of road tax.
Justification for the Green Tax
This new tax is aimed at combating the dangerous health risks associated with vehicular pollution, like carbon monoxide, nitrogen oxides, lead, particulate matter, etc. These pollutants can cause severe health problems like cancers, respiratory and cardiovascular ailments, increased mortality, morbidity, and impaired pulmonary function. The tax aligns with the “Polluter Pays Principle” established in the 1992 Rio Declaration, which states that those who produce pollution should bear the costs of managing it to prevent harm to human health and the environment.
Carbon Pricing Strategy
India, alongside the U.S., China, and Japan, are bear the brunt of climate change’s impacts. A strategic approach to alleviate their condition and reduce greenhouse gas emissions is carbon pricing, which the green tax embodies. Carbon pricing charges a cost for emitting carbon dioxide, reflecting the external costs of these emissions, such as health care costs from heatwaves and droughts, crop damage, and property loss due to flooding and sea-level rise.
Critiques of the Green Tax
Critics argue that imposing this additional tax on public transport like buses will put an increased burden on public citizens already struggling with income losses post pandemic crisis and high rates of taxation on petrol and diesel. They also contend that the green tax would significantly increase overall transportation costs, which could consequently stoke inflation.
Other Strategies for Air Pollution Control
Alongside the green tax, other initiatives designed to curb air pollution include the Graded Response Action Plan, National Electric Mobility Mission Plan (NEMMP), and Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India (FAME India).
Proposed Actions Moving Forward
Further strategies to promote eco-friendly vehicles include price rationalization, incentivizing hybrid and electric vehicles over carbon-based ones without imposing additional taxes. Other proactive measures include promoting pollution-monitoring apps and coordinating efforts amongst stakeholders such as national, state, and local governments, cities, communities at large, and individual citizens. Everyone has a critical role to play in fighting air pollution.
Last Modified: February 10, 2024