Green Tax: An International Perspective

Abstract

ABSTRACT

Objective: The present research paper shall be drafted with the purpose of enumerating and illustrating how environmental and regulatory policies all over the world have led to the incorporation of green tax reforms in the primary tax regime, as a widespread tool to combat the ever increasing pollution globally. It shall further discuss the rationale behind various countries’ adopting green tax as part of their legal framework and debate upon the reliability and plausibility of the implications it has in order to correct such environmental diseconomies. It shall conclude with the range of public acceptance that these reforms have achieved through the ages in various countries and recommend the changes, if any, that may be made under the Indian law to better equip with the current international standards to maintain a steady balance between industrialisation and environmental protection.

Scope: The ultimate objective behind levying Green Tax is to keep a check on the non-environment friendly product and services so that the negative impact from the usage of the same can be offset. By charging firms and people approximately the same price as the value of the damage done by the externality, the government gets them to internalize the negative externalities they are creating. These reforms consist of firstly the adaptation of existing taxation systems so as to conform to an environmentalist line of reasoning and, secondly, the introduction of new taxes with a financial, environmental or mixed nature. Examples of measures adopted in a reform program of this kind include changes in fuel taxation from the current specific tax to one that takes into account the environmental impact of different kinds of fuels, or a new tax on harmful emissions.