Context: Recently, the Centre announced its plans to impose a "green tax" on older vehicles in a move to disincentive the use of polluting vehicles and to curb pollution in the country.
Background

• In 2016, the Centre had floated a draft Voluntary Vehicle Fleet Modernisation Programme that aimed to take 28 million decade-old vehicles off the road.
• The panel of secretaries suggested the scheme may combine a phased regulatory approach for capping the life of vehicles along with stricter emission norms.

Current Scenario

• The Ministry of Road Transport and Highways will levy a green tax on transport vehicles older than eight years at the time of renewal of fitness certificate at the rate of 10% to 25% of road tax.
• The revenue collected through the green tax will be kept in a different account and will only be utilised for tackling pollution.

Exemptions

• Vehicles like strong hybrids, electric vehicles and those running on alternate fuels like CNG, ethanol and LPG and vehicles used in farming, such as tractor, harvesters and tillers will be exempted.

About Green Tax

• Green tax, or pollution tax or environmental tax, as it is also called, is an excise duty on goods that cause environmental pollutants.
• It is believed that charging tax on emissions will help bring about changes in firms and households.

Differential Taxation

• Personal vehicles are proposed to be charged green tax at the time of renewal of registration certification after 15 years.
• Public transport vehicles, such as city buses, will be charged lower green tax.
• Higher green tax (50% of road tax) will be levied on vehicles being registered in highly polluted cities.
• Differential tax will also be charged depending on fuel (petrol/ diesel) and the type of vehicle.

Justification of the Green Tax

• Combat Health Hazards by Vehicular Pollution: The major pollutants like carbon monoxide (CO), nitrogen oxides (NOx), photochemical oxidants, lead (Pb), particulate matter (PM), etc. can have direct as well as in-direct impact, like reduced visibility, cancers, respiratory and cardiovascular ailments, increased mortality, morbidity and impaired pulmonary function.
• In Accordance with "Polluter Pays Principle": It is the commonly accepted practice that those who produce pollution should bear the costs of managing it to prevent damage to human health or the environment.
• For example, a factory that produces a potentially poisonous substance as a byproduct of its activities is usually held responsible for its safe disposal. Similarly Green tax is to be paid by the owners of pollution causing vehicles.
• Polluter Pays Principle is part of the 1992 Rio Declaration which gives broader principles to guide sustainable development worldwide.

Carbon Pricing: India along with the U.S, China and Japan are some of the countries that are hardest hit by climate impacts. In order to mitigate the condition and reduce the GHG emissions, one smart approach is pricing Carbon such as introduction of Green tax.

Carbon Pricing: It is an instrument that captures the external costs of greenhouse gas (GHG) emissions — the costs of emissions that the public pays for such as:

• damage to crops,
• health care costs from heat waves and droughts and
• loss of property from flooding and sea level rise.

Carbon pricing ties them to their sources through a price, usually in the form of a price on the carbon dioxide (CO2) emitted.

Need for Green Tax on Vehicles

• It is estimated that commercial vehicles, which constitute about 5% of the total vehicle fleet, contribute about 65-70% of total vehicular pollution.
• The older fleet, typically manufactured before the year 2000 constitutes less that 1 % of the total fleet but contributes around 15% of total vehicular pollution.
• The older vehicles pollute 10-25 times more than modern vehicles.