The Union government has approved a proposal to tax older vehicles that are polluting the environment. Called the ‘green tax’, the proposal seeks to tax vehicles older than a fixed number of years (depending on the category). Before the proposal is notified, it will be sent to state governments for a consultation.
The proposal seeks to levy the green tax on personal vehicles at the time of renewing the registration certificate after 15 years. For transport vehicles, the tax is proposed to be levied for vehicles older than eight years when the fitness certificate is to be renewed, and can be levied between 10-25% of road tax.
It also proposes to levy a green tax at 50% of road tax for vehicles being registered in highly polluted cities. Additionally, the tax could also be different depending on the fuel the vehicle uses and the type of vehicle.
Public transport vehicles, such as city buses, will be charged a lower green tax.
Vehicles like strong hybrids, electric vehicles and alternate fuels like CNG, ethanol, LPG, etc. are proposed to be exempted. Also in the exemptions list are vehicles used for farming, such as tractors, harvesters and tillers.
The revenue collected from the green tax, the proposal adds, is to be kept in a separate account and used for tackling pollution. It states that states can use this to set up facilities for emission monitoring.
The benefit of the green tax, according to the Ministry of Road Transport and Highways, is to dissuade people from using vehicles which damage the environment and switch to newer vehicles. “Green tax will reduce the pollution level, and make the polluter pay for pollution,” the ministry said.
“It is estimated that commercial vehicles, which constitute about 5% of the total vehicle fleet, contribute about 65-70% of total vehicular pollution. The older fleet, typically manufactured before the year 2000 constitute less that 1 % of the total fleet but contributes around 15% of total vehicular pollution. These older vehicles pollute 10-25 times more than modern vehicles,” the ministry said.
This comes ahead of the government being expected to notify the scrappage policy. According to the Hindustan Times, motorists and freight operators who buy new vehicles after their old ones are scrapped may get a registration fee waiver as well as a discount on road tax. The policy also reportedly has disincentives, such as a higher fee for fitness certificate above a certain vehicle age, and restrictions by states on the entry of older vehicles into city limits.