02-02-2021 | 13:23 PM
Green Tax
Context
The Ministry of road transport has decided to impose additional taxes on old vehicles, which no longer fit on the road. This additional tax is named the “Green Tax”. This decision was taken to curb pollution.
Key Highlights
Under the Green Tax norms, the Ministry of Road Transport and Highways will levy a green tax on vehicles older than eight years at the time of renewal of fitness certificate at the rate of 10% to 25% of road tax.
The revenue collected through the green tax will be kept in a different account and will only be used to combat pollution.
The states have been asked to set up state-of-art facilities for monitoring the emission.
Public transport vehicles like city buses will be paying lower Green Tax. However, Vehicles like strong hybrids, electric vehicles and those running on alternate fuels like CNG, ethanol and LPG and the vehicles used in farming like tractor and harvester will be exempted from the tax.
The Green tax will reduce the pollution level and will also make the polluter pay for creating pollution.
Differential Taxation:
Personal vehicles are proposed to be charged green tax at the time of renewal of registration certification after 15 years.
Public transport vehicles, such as city buses will be charged lower green tax. Higher green tax (50% of road tax) will be levied on vehicles being registered in highly polluted cities.
Differential tax will also be charged depending on fuel (petrol/ diesel) and the type of vehicle.
About Green tax
Green tax is also referred to as pollution tax or environmental tax. The tax is an excise duty on goods resulting in environmental pollutants. An economic theory suggests that if taxes are levied on emissions causing pollution, it will lower the environmental impairment in a cost-effective manner. The tax will encourage the behavioural changes in households and firms which are required to reduce the pollution. The tax mainly aims to ensure that polluters are duly punished for their pollution creating activities.
