Syllabus Section: Economy

Why in News?

In a bid to curb pollution and motivate people to switch to environment-friendly alternatives, the road transport ministry decided to impose additional taxes on old vehicles that are unfit for roads as 'green taxes'.

What is Green Tax?

The central government approved a proposal to levy a "Green Tax" on old vehicles that are considered polluting to the environment. As part of the proposal transport vehicles older than 8 years could be charged a tax at the rate of 10-25 percent of road tax at the time of renewal of fitness certificate.

Significance of the Move:

Green Tax has been proposed to dissuade people from using vehicles that damage the environment, motivate them to switch to newer, less polluting vehicles and to reduce overall pollution level and make the polluter pay for it.

Key highlights:

• For personal vehicles, the tax would have to be paid at the time of mandatory renewal of registration certificate after 15 years.

• Currently, all commercial vehicles need to get a fitness certificate renewed every year after the first two years.

• The tax could be as high as 50 percent of road tax in most polluted cities like Delhi-NCR while there may be a differential rate for petrol and diesel vehicles.

•  Diesel vehicles that are considered more polluting than petrol may attract a higher rate.

• Revenue collected from the Green Tax to be kept in a separate account and used for tackling pollution, and for states to set up state-of-art facilities for emission monitoring,

Vehicles like strong hybrids, electric vehicles, and those running on alternate fuels like CNG, ethanol, and LPG will be exempted. Public transport vehicles, such as city buses, will be paying lower Green Tax, meanwhile, vehicles used in farming, such as tractors, harvester, tiller, etc to be exempted entirely.

Source: Buisness standard