The Scope and Limitations of Environmental Taxes in a Developing Country Setting
The Scope and Limitations of Environmental Taxes in a Developing Country Setting
1. Introduction
This paper begins by briefly outlining the impact of development on the environment and the consequent need to mitigate further environmental damage. Economically, the use of environmental taxes serves as an incentive-based tax to curb behaviour that is damaging to the environment. The paper then provides a brief outline of environmental taxes. Looking specifically at ‘first tier’ emerging markets, this paper emphasises the necessity of mitigating the environmental damage that accompanies economic growth and industrialisation. Following this, the case of India (as one of the few developing countries that has implemented environmental taxes) is analysed in detail. This paper concludes by looking at the limitations and challenges of the use of environmental taxes in developing countries; as well as possible ways forward.
2. Development and the Environment
In ‘Reconstructing Development Theory: International Inequality, Institutional Reform and Social Emancipation’ Brett puts forward the idea that the environment has not historically, or sufficiently, been considered in the context of development because low income countries had not industrialised and therefore produced negligible emissions (Brett, 2008).
The environment has however increasingly become a point of contention in recent years as developing countries – particularly countries like China and India that have experienced rapid economic growth (and industrialisation) – industrialise under threat of greater environmental restrictions from the international community. These restrictions were not faced by the currently developed world during their time of development (Brett, 2008). Rising consumerism in developing countries, coupled with high levels of population growth has put the environment under further pressure (Buch-Hansen & Lauridesen, 2012). In short, the nature of development has been such that the
1. Introduction
This paper begins by briefly outlining the impact of development on the environment and the consequent need to mitigate further environmental damage. Economically, the use of environmental taxes serves as an incentive-based tax to curb behaviour that is damaging to the environment. The paper then provides a brief outline of environmental taxes. Looking specifically at ‘first tier’ emerging markets, this paper emphasises the necessity of mitigating the environmental damage that accompanies economic growth and industrialisation. Following this, the case of India (as one of the few developing countries that has implemented environmental taxes) is analysed in detail. This paper concludes by looking at the limitations and challenges of the use of environmental taxes in developing countries; as well as possible ways forward.
2. Development and the Environment
In ‘Reconstructing Development Theory: International Inequality, Institutional Reform and Social Emancipation’ Brett puts forward the idea that the environment has not historically, or sufficiently, been considered in the context of development because low income countries had not industrialised and therefore produced negligible emissions (Brett, 2008).
The environment has however increasingly become a point of contention in recent years as developing countries – particularly countries like China and India that have experienced rapid economic growth (and industrialisation) – industrialise under threat of greater environmental restrictions from the international community. These restrictions were not faced by the currently developed world during their time of development (Brett, 2008). Rising consumerism in developing countries, coupled with high levels of population growth has put the environment under further pressure (Buch-Hansen & Lauridesen, 2012). In short, the nature of development has been such that the
References: Bluffstone, R. (2003). Environmental Taxes in Developing and Transition Economies. Public Finance and Management, 1. Brett, E. (2008). Conclusion. In E. Brett, Reconstructing Development Theory: International Inequality, Institutional Reform and Social Emancipation (pp. 208-216). Basingstoke: Palgrave Macmillan. Bruce, N., & Ellis, G. (1993). Environmental Taxes and Policies for Developing Countries. World Bank Policy Research Department. Buch-Hansen, M., & Lauridesen, L. (2012). Introduction: The Past, Present and Future of Development Studies. Forum for Development Studies, 39(3), 293-300. International Monetary Fund. (2013, April). World Economic and Financial Surveys: World Economic Outlook Database. Retrieved from International Monetary Fund: http://www.imf.org/external/pubs/ft/weo/2013/01/weodata/index.aspx International Tax Review. (2011, October 20). India 's Infant Environmental Taxes Slowly Growing. Retrieved from International Tax Review: http://www.internationaltaxreview.com/Article/2921577/Indias-infant-environmental-taxes-slowly-growing.html Ocran, N. ( 2012). Finance and Sustainable Development. In N. Ocran, Issues in Development Finance (pp. 48-51). Africa Growth Institute. Organisation for Economic Co-operation and Development. (2011). Environmental Taxation: A Guide for Policy Makers. Retrieved from OECD: http://www.oecd.org/env/tools-evaluation/48164926.pdf Srivastava, D., & Bhujanga Rao, C. (2010). Reforming Indirect Taxes in India: Role of Environmental Taxes. East Asian Bureau of Economic Research. United Nations. (2013, June). Carbon Dioxide Emissions. Retrieved from Millennium Development Goals Indicators: http://mdgs.un.org/unsd/mdg/SeriesDetail.aspx?srid=749&crid=