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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