Time For Climate Tax
Context: India needs to change its pro-rich, anti-poor taxation policies in Climate Change Policies.
Issues in existing policy of India in Climate Change
- Emphasised on rich countries to help poor countries to develop their renewable energy capacities: West is likely to be too selfish in paying all its dues.
- Instead of making the exchequer benefit, government strengthened the taxation policy:
- First decision was to replace the wealth tax by an income tax increase of 2% for households.
- Lowered the corporate tax: for existing companies from 30% to 22%, and for manufacturing firms incorporated from 25 to 15%, the biggest reduction in 28 years.
- Union budget has been geared towards pleasing the middle class: In the 2019-20 budget, the IT exemption limit jumped from Rs 2,00,000 to 2,50,000 and the tax rate for incomes up to Rs 5 lakh was reduced from 10 to 5%.
- New taxation policy deprived the state of important resources: To partly compensate for the decline of direct taxes, the government has increased indirect taxes, which can affect Indians’ income.
- Taxes on fuel sales: large share in the government’s revenues. About 2/3rd of the cost of petrol now goes towards taxes.
Way Forward
- Taxing the well-off could help raise resources to deal with important issues like climate change.
- Poor countries may well have to help themselves to make the transition that society urgently needs.
- One source of funding in resolving Climate Change could well be the well-off citizens of India, who are getting richer and richer.
- Country has one of “the world’s fastest-growing population of millionaires”: Average wealth of these millionaires has increased by 74% over this period.
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