Environmental taxation on corporate social cost externalities A tax policy for negative eco externalities

Abstract

Environmental degradation is one of the major threats to the earth due to increasing newlineanthropogenic emissions. Increasing product demand (due to population growth) and newlinehigh production by corporations are the major reasons for environmental newlinedegradation. Environmental degradation is a major negative externality caused by newlinecorporations due to increasing the gap between the private and social costs they incur newlinewhile producing goods for society. Environmental taxation is a fiscal measure newlineadopted by governments worldwide to mitigate accelerated carbon emissions. India newlineis suffering from human environmental issues, especially carbon emissions due to newlineenergy and the Industrial Process and Product Use sectors. However, India has not newlineadopted any significant fiscal measures yet to mitigate environmental issues. Hence, newlinethe study focuses on suggesting an environmental taxation model for India. newlineBefore suggesting the model, the study assesses the effectiveness of environmental newlinetaxation in OECD countries through panel data analysis using secondary data from newlinethe World Bank and the OECD database. The study found that environmental newlinetaxation significantly affects emissions in OECD countries. Further, to design a newlinebasis to set up the base for environmental taxation according to the suggestion by newlineuse and land use change and forestry, and waste sectors. The study identifies that the newlineenergy and IPPU sectors should initially be taxed due to their high contribution newlinesectors to charge the environmental tax in India. To suggest a wholesome tax design newlinecovering all the aspects of a taxation system, the study took inferences from newlineestablished taxation systems worldwide. The study selected five countries having newlinesimilar income levels as India, according to the World Bank, for understanding and newlinesuggesting an inferential taxation system for India. newlinetaxation system coverage, tax design, newlinetax system, tax rate, fund utilisation reporting and tax reduction system of India. newlineKeywords: Carbon emission; Carbon tax system; taxation model; Environmental newlinetaxation