Home General Knowledge GK SPECIAL TOPIC : GREEN TAX
Tuesday, 08 July 2014 03:11


• It is a tax paid by consumers for products or services that are not environmentally friendly. Intended purpose of the green tax is to offset the negative impact resulting from the use of non-green products and services.

• Green tax (also called "environmental taxes" or "pollution taxes") could either be incentives such as accelerated depreciation, or penalties such as tax on vehicles.

• In some countries, certain non-tax incentives such as grants or loans are also provided. Broadly, green tax operates in the areas of energy efficiency, green innovation, carbon and climate change, green vehicles, green buildings, water efficiency, pollution control, renewable energy and resource efficiency.

• The US tops the KPMG Green Tax Index 2013 of countries using green tax incentives and penalties to drive sustainable corporate behaviour and achieve green policy objectives. Japan ranks second overall but, in contrast to the US, scores higher on penalties than incentives. The UK ranks third and has an approach balanced between penalties and incentives. India ranks tenth among the 21 countries studied.

• The US tax code provides various incentives, including a production tax credit, on renewable energy. It includes a tax credit for every energy-efficient home built, and tax deduction for the cost of energy-efficient equipment installed in commercial buildings.

• The UK imposes the Climate Change Levy - an environmental tax on electricity, gas, solid fuels (including coal), and liquefied petroleum gas to help the country meet its target for cutting emission of greenhouse gases, including carbon dioxide.

• Vehicle-related tax penalties are aplenty in Japan, including annual tax based on engine size, tax on purchase of vehicle, vehicle tonnage tax, and so on.

• The Netherlands provides accelerated depreciation and deductions on qualifying energy-efficient assets, the impact of which has been a significant reduction in energy consumption and carbon dioxide emissions, and 45 per cent increased investment in energy efficiency over a year.

• India, too, has been providing incentives, and of late there has been an increase in penalties.

• Carbon tax (introduced in July 2010) of Rs 50 per tonne of coal produced or imported into India.

• India provides for a 100-200 per cent tax deduction on the revenue and capital expenditure incurred by a company on scientific research (excluding expenditure on land and buildings).

• India grants ten-year tax holiday for companies in the renewable power sector within the first 15 years of operations beginning before March 31, 2014.

• Recently India introduced 3 per cent hike in excise duty on certain Special Purpose Vehicles.