Feasibility of Incentive Based Environmental Regulatory Instruments in State and Central Taxation
Project Team: Dr. D.K Srivastava, Dr. C. Bhujanga Rao.
Time Period: 2007- 2008
Sponsored by: Ministry of Environment and Forests.
Project Summary:
Taxes on polluting inputs and outputs have been suggested as a proxy for taxing emissions. These taxes could be levied at the manufacturing stage, consumption stage or disposal stage. These have been called “presumptive taxes” since it is presumed that levying these taxes will reduce pollution. In an earlier study done by the Madras School of Economics and the National Institute of Public Finance and Policy, the focus was primarily on inputs/outputs that could be taxed through central taxes such as central excise or CENVAT. In some cases, an eco-cess was recommended, which could be earmarked as special fund. Other policies like accelerated depreciation and capital subsidies were suggested for “green” substitutes. The purpose of the present study is to explore the feasibility of using tax instruments in India, particularly at the state level. There may also be other central taxes such as customs duties which could be used as incentives/disincentives.