Monday, January 08, 2007

The case for a 'Green tax' in Kerala

According to the Environment (Protection) Act, 1986 “environment" includes water, air and land and the inter- relationship which exists among and between water, air and land, and human beings, other living creatures, plants, micro-organism and property; "environmental pollutant" means any solid, liquid or gaseous substance present in such concentration as may be, or tend to be, injurious to environment; and "environmental pollution" means the presence in the environment of any environmental pollutant.

Though this Act gives power to the Government, not much has been done. The enforcement of environmental regulation is weak in developing countries like India, and thus the citizens are being compelled to sue the polluters or take direct actions that are costly to the polluter. [Santhakumar]

According to Santhakumar, the institutional imperfections present in protecting the environment are weak enforcement of environmental regulations, long delays taken for court settlements, and the low cost for taking, and the possibility of imposing high cost through, unlawful actions.

A country’s environmental problems vary with its stage of development, structure of its economy, production technologies in use and its environmental policies. While some problems may be associated with the lack of economic development (e.g. inadequate sanitation and clean drinking water), others are exacerbated by the growth of economic activity (e.g. air and water pollution).

What is a ‘Green tax’?

A ‘Green Tax’ refers to a tax which is imposed on activities and transactions which aggravate the environmental pollution. The proceeds of this tax are used to conduct environmentally beneficial programmes.

‘Green Tax’ in A.P

From the 27th of November, Andhra Pradesh has started levying the ‘Green Tax’ on vehicles which have been in use for 15 years and above. The vehicles, which are old, produce more pollution than the modern ones. This revenue is then used for environmental protection.

In Kerala

Of late, the Government has shown concern for the environment by banning plastic carry bags. The official website says thus: “In view of the increasing cases of epidemics and their environmental problems, the Government of Kerala has decided to ban the production, storing, consumption, distribution and transportation of plastic bottles, carry bags and cups below 50 microns.”

This state ranks high in the consumption of consumer goods especially cars. Wikipedia states that ‘Traffic in Kerala has been growing at a rate of 10–11% every year, resulting in high traffic and pressure on the roads.’


It is evident that there is not going to be a decrease in the use of automobiles. Imposing a tax to reduce the purchase of vehicles will not prove to be effective as it is a very useful and efficient mode of transportation. Hence, imposing a ‘Green tax’ on vehicles which are old (They tend to pollute the environment relatively more than newly made ones) will help in carrying out programmes to protect the environment.


MC said...

thats a very novel suggestion..and very sensible to charge a green fee for the old vehicles..but i wonder how many people will agree to such innovative and practical suggestions. or rather, will our governments have the resolve to do whats really good, rather than reel behind seemingly voter-friendly policies - and in the process ruin the state.

its also very obvious we need wider roads..and then theres always the question of land scarcity considering we have so little land and so many people (despite chasing away the majority of them for want of jobs!). in this regard, we need to relax construction rules and allow more buildings to go vertical.


We should welcome "Green Taxation" in Kerala. Not only the old vehicles, but petrol guzzling large vehicles like 4 wheel drives and luxury cars should also be green taxed.The amount of carbon emissions ejected by this large vehicles are enormous and is damaging to the envirnoment. In Kerala these large vehicles are status symbols & are a means to show off for the rich & affluent.
As MC said roads need to be widenened, even if it means acquisition of properties on either sides of the road. In Kerala more people die on roads than they do in hospitals!
Last but not the least, the government vehicles are the worst offenders; and KSRTC buses are the worst polluters.The increasing incidence of childhood Asthma is on the rise in Kerala because of dangerous levels of air pollution.
The rivers & lakes are polluted & landfilled by the myopic local authorities.You can see this clearly in Trivandrum, where the Karamana Aaar(river) criss crossess the city in many parts is dumped with all the waste, garbage & plastic bags. Encroachers have occupied the sides of the river with their hutments ; slowly land filling & even planting crops like plantain trees! Myself as a member of Nature Conservancy has voiced my concern several times, but has always fallen on deaf ears because our self seeking administrators!
Kerala will become more of a tropical desert if we do not act now.

PCM said...

A novel idea. But who should be taxed and who will implement that? Even when the people send collect the waste and send it through Kudambasree volunteers, the Local bodies - Panchayats, Municipalities and Corporations - do not have the means or machinery to remove them or treat them as they should be. Waterbodies all over the state are polluted, but the government looks on with unconcern. The KSRTC and private buses are the ones that pollute the air most, but the RTOs are unconcerned. Ordinary people are fined heavily if even their new vehicles do not possess pollution-control certificate, but these buses speed along spewing carbon and other lethel elements. The Green Tax will be, if introduced, yet another weapon in the hands of the police and RT offficials to fleece the private car owners!
All progressive projects have been shelved. The ongoing ones are paved with stumble-blocks by trade Unions. Just officials are transferred to protect the gulity and the corrupt. The State is under overdraft, but ADB and WB loans are taboo. Govt. policies regarding the self-financing institutions and other States' Lottery have been proved wrong by the High Court. What have the Govt. achieved within these seven months of power except hold party meetings and fight factions?

Alex said...

A doubt which everyone has is regarding the efficacy and efficiency of the Government and if the public distribution systems will work.

A 'tax' can be implemented only by the Government. Moreover since the government vehicles are bad polluters, either the machinery has to be improved, which looks to be bleak or the government must spend a certain proportion of state domestic product for environmental protection.

There is another issue, when talking about the funds of Kerala. The FRBM regulation by the central Govt has directed all the states to eliminate budget deficits. This is putting excessive pressure on the Govt. These policies have been suggested by the international agencies.

The problem with wider roads is that, it would further aggravate the pressure on land, causing an undue hike in real estate prices.

One possible way is to (like you all say) introduce a 'green tax' which is progressive, as in higher polluting vehicles got to pay more tax.

Another issue, is that once a tax is introduced, like MC mentioned, voters are not happy. But, it is high time the citizens did all they can to help and save our state and this world.

Sadly, there are people who say that 'global warming' is not happening. the comments which i received on my post on the environment are proof to it.

Vinod/Kakka said...

I like the premise of the tax, but with the current state of governance, there will be no way of figuring out how the tax collected is used. If this happens in Kerala, this would just mean an increase in the size of the beaurocracy, and the money collected will pay for their salaries.

Sarah said...

Why would someone want to drive an old junk? If the driver had enough money, then he would be driving the latest, environmentally friendly, fuel efficient vehicle. The fact that someone still uses an old vehicle for transporation is a proof that, public transport system has failed average joe public.
Wouldn't it be better, if taxes are imposed on new vehicles and that money is used to provide better public transportation and better roads.. rather than penalizing someone already struggling to make ends meet?

In a state like Kerala where land is scarce, instead of widening the road, wouldn't it be better, if we build elevated highways??

Anonymous said...

Instead of taxing old vehicles, fuel guzzling sports cars etc. why can not we impose a small cess on fuel(Petrol & Diesel). This way every body pays proportionally for the damage they do. The more fuel efficient you are, you pay less cess. This way the difficulties in implementation(More men to collect this tax other wise/bribe sought by RTO & Police, saving the tax by registering the vehicle outside state & using inside etc.) can be avoided.

Tinkerbells said...

We may also need to look at incentivising "good" behaviour...some way to encourage office buses, school buses, car pools etc to reduce the reliance on personal vehicles...

Riot said...


Thanks for bringing up this topic. It is good to see a lively discussion. I have been thinking about it. Here are some initial thoughts.....

One anonymous comment here suggests taxing petrol. That probably is the most easiest to implement. But higher the price of petrol the higher the chances of adulteration. Adulterated petrol spews more venomous stuff. Indian pollution control board is too weak. That is why supreme court forced Delhi to go the CNG route.

It is basic human tendency to avoid tax. People will come up with innovative ways to dodge it. So a green tax could lead to more corruption and red tape.

It was surprising to find that many of the organized opposition to green tax in Himachal came from the tourism industry. They felt that the tax would reduce visitors. In fact it is quite the opposite. The greener and cleaner the place more the tourism. So education and awareness is a key

If I remember a 2004 CSE study, it was found that 2 wheelers and 3 wheelers were the most polluting. What if the government working with the vehicle manufacturers gave tax incentives to buy newer cleaner high mileage vehicles when they gave up their old vehicles ? In the US a tax incentive on the Toyota Prius was one of the reasons it was very popular. Wait list was 3-6 months. Private sector is very good at marketing and getting the news out. Lower prices means more sales for them.

Incentives coupled with a green tax on very old vehicles I think might work. Tax from old vehicles will need to go into the incentive program

One thing I am very convinced about is that new vehicles that do not meet strict emission and mileage standards should be green taxed sky high. These vehicles have no right to be on the roads and manufactures should never be encouraged to design or build them

My comment has gone for too long :) If I have more thoughts I might come back :) Or I might just post something on my blog

Babin said...

I think adding a small cess on petrol for an environmental fund and using the money derived from it to build a more robust environmental protection institution or to subsidize green technology will be the most reasonable way to go.

BTW, taxation of petrol is quite interesting. In india around 55% of the final price of petrol is tax! To put it in perspective petrol tax rate is 77% in UK, 74% in France and a low 26% in USA. ( Source: The Hindu article referenced bellow).
I am all for pushing the taxes even higher as long as the money is used for environmental protection or improving our infrastructure.

PCM said...

A final comment. Petrol is already taxed very high, but where does all the tax amount go? Vehicles in Kerala have multiplied exponentially, but roads haven't even doubled. What does the Govt. do with all the road tax collected in one instalment for 15 years?
What we need are good roads. It is not true that Kerala is densely populated. The sides of existing roads may be well-occupied, but making any number of wide roads along unpopulated areas is still a possibility. Of course, some sacrifices may have to be done a few in the interest of all road-users; dwellings and shops can come up along the sides of the new well-designed roads, the standard of living can rise sky-high. Vehicles can pass at optimum speeds, saving a lot of fuel without pollution. (What happens now is that even the most fuel-efficient vehicles have to go at snail's pace, burning a lot of fuel and causing intense pollution) But to achieve this, there has to be a political consensus and elimination of regional parochialism. Remember all the objections raised by the leftists against the express highway – Veliyam Bhargavan went to the extent of saying that ‘we don’t need roads for the rich to race through the length of Kerala in posh cars’! Remember also the objections raised against the Vallarpadom rail project and all the difficulties experienced in obtaining land for roads and railways. Whichever be the area through which the road/rail has to pass, a few people will assemble in protest with the help of discontented political parties.
Unless and until the people of Kerala get ready to make a few sacrifices for the sake of common interest, we cannot think of Progress. "Good men may make good laws, but good laws do not make good men."

abhishek said...

A green tax is a good idea, but there's a reason why it's not so popular in developing economies as opposed to developed economy. You need to have a sufficiently meritocratic and depoliticized market system and sufficient economic growth to support green taxes, because taxing economic growth in an economy's nascent stages will only hurt it. Particularly in Kerala's case. As PCM pointed out, green taxes will go the same way as existing taxes - misspent and corruption. If anything, we will have to reduce tax rates to offer any sort of incentive to investors to switch from other states. Because Kerala has nothing else to offer.

Taxes are redistributive systems - they pass wealth from the rich to the poor. They do not create wealth for either party, unless they are used to construct public goods including power plants, highways, roads and other infrastructure that have positive social externalities. Contrary to most expectations, Kerala's resources far exceed their usage, because most wealth flowing into Kerala goes into non revenue-generating investments such as buying real estate, constructing houses and retail stores. Very little of it goes into job-generating investments. And if only they would be allowed to go there. Half of our problems would disappear. Taxes don't change that situation. Under our current system, they will just create space for misuse.

Babin said...

Governments love taxing petrol since it is very easy to collect.
I feel a green tax on petrol or old vehicles will be politically quite feasible in kerala. It is very well aligned with the political ideology of both political fronts. As long as governments slowly phased in the new tax within a 5 to 10 yr period, the impact on people and business will be minimal.

We shouldn't be afraid of doing new things because we 'fear' possible corruption. That would be the worst impact of corruption.

abhishek said...

True, but if we have been unable to use the tax we collect till date properly and efficiently then I don't have much hope for future taxes.
My other fear is that we'll be squeezing an already tiny tax base with old vehicles. They may scour the countryside already.
I like the idea of green taxes, but am not sure that taxing petrol usage by old cars is the way to go. There are logistic problems with it, beginning with how are you going to ensure everyone's subjected to the same and non-arbitraty treatment. Perhaps, an alternative is to impose road tolls and congestion taxes in the cities. Congestion creates excess pollution in terms of the number of idle engines on the road. Driving in Kochi is also practically impossible at peak hour and congestion taxes (collected through tolls) would identify the congestion creators and tax them specifically.

Babin said...

@Abishek, it is a chicken or egg issue again.
One of the main reason why there is higher levels of corruption in developing countries is because these governments are unable to raise enough resources (via tax) to put forth sufficient quality control measures in its operations. The more tax they collect, people can expect more quality and accountability. Of corce, it need to be balanced against peoples' concern that they may be trying to fill up an 'ootta' bucket. But again, the issue is that government may need money to fix wholes in its bucket.

I agree there are logistical issues with collecting tax/fines on old vehicles. Compliance costs may well overshadow benefits. A Petrol cess will the easiest method on a tax compliance point of view.
It is also a good idea to charge high tolls on cars entering city limits to persuade them to use mass transit.
Wait untill TATA unviel their Rs/-One Lakh car next year, even beggers will be buying cars then!!! (well slight exaggeration:)) Anyway, traffic is only gona get worse.

abhishek said...


Good point.

Yeah, the Rs. 1 lakh car will change Kerala's landscape, and hopefully place pressure on the government to finally push through the much-need infrastructure. Somehow, I think the CPI and its coterie will still view cars as "luxury goods" and treat public transportation as its vassal to top.

GVV said...

Population explosion is an old topic.In Keralam what is so alarming is vehicular explosion.Conspicuous consumption of newly rich NRI and local snobs has flooded the roads with all types of cars. One fellow will drive his 8 seater posh car on his daily trip to the city! So much oil and parking space are wasted.
Therefore, I recommend:
1.Steep taxes on vehicles,
2.steep entry taxes on those who purchase from other states,
3.A Pigouvian tax, and,
4.A space tax on big cars etc.

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Anonymous said...

For an efficient public transport system in Kerala

Reusing waste plastics

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