Taxing polluters

  • 24/02/2008

  • Business India (Mumbai)

Without question, public interest is frightfully undermined in a state where law enforcers themselves largely subvert the rule of law. On the face of it, India has an ironclad legal structure to combat any threat to the environment: as many as 420 Acts, rules, notifications and provisos have been legislated to safeguard the environment and prosecute the polluter. The Constitution itself mandates the state to 'protect and improve the environment and to safeguard the forests and wildlife of the country.' It simultaneously imposes a duty on every citizen 'to protect and improve the natural environment, including forests, lakes, rivers and wildlife'. Reference to the environment has also been made in the Directive Principles of State Policy as well as in the Fundamental Rights. The Department of Environment was established in 1980 with the charter to ensure a healthy environment for the country and its citizens. This later became the Ministry of Environment and Forests (moef) in 1985. The Environment Protection Act, 1986, framed in the wake of the Bhopal gas tragedy of December 1984, is considered an umbrella legislation as it filled many gaps in the then prevalent laws. A spate of environmental laws followed to keep pace with problems, for example, the Handling and Management of Hazardous Waste Rules of 1989. Then why the environmental degradation and devastation all around, in both our urban and rural context? Seemingly, the more the rules, the greater the transgressions. And these violations have been emboldened and nurtured by collusion by the enforcement agencies, for personal gain or for populism. Ankleshwar and Vapi are two of the 10 most polluted urban centres worldwide. The recently enacted Scheduled Tribes and Other Forest Dwellers (Recognition of Forest Rights) Act, an unabashedly populist vote-garnering legislation, grants up to four hectares of forest land to each family that has occupied forest land before 13 December 2005. This Act applies to forestlands that include wildlife sanctuaries, national parks and tiger reserves. With no provisions to ensure forest protection, the Act menacingly opens forests to privatization even though they are public property. It sounds simplistic, but it is indisputable that to ensure environmental sanctity, what is needed is stringent enforcement of existing laws rather than more new ones. A pioneering study coordinated by Raja Chelliah, chairman emeritus, Madras School of Economics (mse), perhaps misses the wood for the trees. It provides proposals for what it terms 'eco-taxes' in various sectors such as coal, automobiles, phosphate-based detergents, chlorine in paper, pulp and viscose rayon industries, pesticides, fertilizers, lead acid batteries and plastics. Past experience has all along proved that polluters are eager to pay the penalties levied so long as their offences remain unchecked. Pollution control board agents, from both the Central and state governments, have been known to regularize any number of violations, for a consideration, of course. There was also, for instance, the law that banned the use of claxons -super-loud musical automobile horns - while their manufacture was not. The Municipal Corporation of Greater Mumbai too has recently promulgated rules that threaten fines of Rs500 for any pet dirtying the streets and Rsl,000 for washing cars on public roads, but it blissfully undermines its own mandate by leaving refuse unpicked and not attending to filth-ridden gutters and sewers. In his foreword to the book, former Reserve Bank governor C. Rangarajan, who now chairs both the mse and nipfp, indicates that the major advantage of the eco-tax proposals submitted in the study is that they utilise the existing system of Central taxes, unlike emission taxes or tradable permits, which require legal and institutional capacity. The proposals themselves were prompted by the recommendation in the National Environment Policy of 2006 to use economic instruments to supplement environmental regulations. The authors note that economic instruments have become increasingly popular worldwide as a strategy to achieve environmental goals. They argue that a tax on input/output is an ideal instrument for controlling pollution for dispersed non-point source pollution. On coal, for instance, they recommend ecocess that varies from Rs20 to Rs50 per tonne of coking coal and Rs50 to Rs70 per tonne of non-coking coal. "A clean fund may be created to utilise the revenue from the ecocess for setting up infrastructure for coal washing, selective mining and r&d to identify activities by gainful utilisation of coal ash and safe storage and disposal of the residual ash," they write. For automobiles, they recommend (i) an annual emission fee which may increase with the age of the vehicle, (ii) introduction of emission warranty programme, and (iii) clean alternatives to be specified and certified for use by the regulator.