DMPQ-. Define the concept of Eco Tax. Also mention how it’s relation with covid-19 pandemic and it’s impact on economic growth.

The COVID-19 pandemic has forced countries all over the world to rethink climate change and the need for preservation of the environment. Fiscal reforms for managing the environment are important, and India has great potential for revenue generation in this aspect.

Environment regulation, may take several forms:

  • command and control;
  • economic planning/urban planning;
  • environmental tax (eco tax)/subsidies; and
  • cap and trade.

Impact on the Economic Growth

  • The implementation of an environmental tax in India will have three broad benefits: fiscal, environmental and poverty reduction.
  • Environmental tax reforms can mobilise revenues to finance basic public services.
  • The revenue can finance research and the development of new technologies.
  • Most countries’ experiences suggest negligible impact on the GDP, though such revenues have not necessarily been used for environmental considerations.
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