0.2077
900 319 0030
x

25/07/2019 - Environment

iasparliament Logo
July 25, 2019

The carbon tax can be an effective policy instrument for realising India’s Paris commitments and can substitute the current Clean Environment Cess. Justify (200 Words)

Refer - Financial Express

Enrich the answer from other sources, if the question demands

 

5 comments
Login or Register to Post Comments

IAS Parliament 5 years

KEY POINTS

·        Putting a price on carbon and taxing it directly is considered far better than deciding the limit of emissions through the ‘cap and trade’ system, under which maximum emission limits are decided for the firms.

·        Firms are required to buy permits if they pollute more than the prescribed limit. Similarly, firms can sell their permits to others if they pollute less than the limit.

·        Obviously, the carbon tax system has advantages over the ‘cap and trade’ system due to its simplicity, affordability, revenue recycling and predictability of carbon prices. Further, the tax has price certainty, transparency and focuses on direct response as it checks unintended incidence of certain taxes on labour and capital, leading to employment generation, increased output and productivity.

·        Clearly, the carbon tax has three benefits. It a) reduces emissions; b) stimulates innovations; and c) raises government revenue.

·        In fact, a carbon tax is the most basic economic instrument which can be used to price carbon and combat CO2 emissions, and correct negative externalities. It works on the principle of ‘the polluter pays’.

·       
It can be argued that a carbon tax can easily be an effective policy instrument in reducing different local pollutants and achieving INDC targets for India.

·        Moreover, the tax can substitute the current Clean Environment Cess, which serves little to no purpose as the it is subsumed under GST. Tax proceeds may be used to a) subsidies clean fuels and fuels used in the agriculture sector, b) promote electric vehicles through subsidy, c) improve public transport, and d) build infrastructure.

·        The primary aim of the tax is to discourage environment unfriendly production and consumer practices by making the polluting sources costlier without any negative effect on overall employment and output levels.

·        The imposition of a carbon tax with revenue recycling, in terms of earmarking the revenue for related purposes, will help develop synergies and win-win situations.

·        The revenue so generated will also contribute to the dwindling tax revenue, and reduce the fiscal deficit, which is targeted at 3.3% for 2019-20. Time has come when India has to become a pioneer among emerging economies and impose an explicit carbon tax, and let the polluters pay.

Krish 5 years

Kindly review sir,Thank u

IAS Parliament 5 years

Try to include about India's INDC goals and link with carbon tax. Keep writing.

K. V. A 5 years

Pls review

IAS Parliament 5 years

Good answer. Keep writing.

Harisindhan 5 years

Critically Review .thank you

IAS Parliament 5 years

Need better understanding. Try to avoid listing out points. Try to mention about INDC goals of India and link with carbon tax. Keep writing.

Tapasvi 5 years

Kindly review

IAS Parliament 5 years

Try to include about India's INDC goals and link with carbon tax. Keep writing.

ARCHIVES

MONTH/YEARWISE - MAINSTORMING

Free UPSC Interview Guidance Programme