Accounting for India's Forest Wealth - Madras School of Economics

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Table 8 indicates that many of the polluting good suffered ahigher indirect tax rate in 2006-07. By that time many states hadaccepted and implemented Statevat. Only a few states implemented itafter 2006-07. Clearly, a lowering of the GST rate from these high levelswould encourage greater used of the polluting goods. The ThirteenthFinance Commission based on the NCAER report has observed that themove to GST will have positive environmental outcomes. This is basemainly on estimated lower energy consumption while growth takes place.Since the NCAER report uses 2003-04 input-output coefficient matrixesand since these coefficients remain fixed any substitution effects induceby lowering of effective tax rate on the polluting goods are not captured.On the aspect of energy intensity of growth both international and Indiaexperience indicates that with technological improvement energyintensity has been going down. GST has no direct bearing on it.34
Table 8: Effective Tax Rates for Selected PollutingGoods/IndustriesIndirect Taxes Net of Subsidies as percentage of Gross Value Added2003-04 2006-07 2003-04 2006-07Electrical industrial112.8 81.8 Fertilizers 24.7 28.1machineryBatteries 81.8 61.9 Motor cycles and30.0 27.5scootersElectrical wires & cables 73.6 59.5 Soaps, cosmetics & 22.7 26.4glycerinPetroleum products 31.9 56.9 Drugs and medicines 23.3 25.0Iron and steel foundries 52.0 56.7 Non-ferrous basic 32.0 24.1metalsElectrical appliances 70.0 56.2 Other chemicals 23.3 23.7Plastic products 42.9 39.8 Pesticides 20.1 23.4Iron and steel casting &forgingPaints, varnishes andlacquers35.5 35.0 Coal tar products 24.3 21.630.3 34.4 Printing andpublishing21.3 19.4Motor vehicles 37.0 34.1 Iron, steel and ferro 9.1 17.1alloysSynthetic fibers, resin 28.1 32.7 Leather and leather 8.2 17.0productsInorganic heavy chemicals 29.9 31.5 Cotton textiles 10.1 10.1Paper, paper prods. &35.3 31.4 Cement 12.5 9.9newsprintOrganic heavy chemicals 28.8 30.8 Electricity -31.5 -20.3Notes: 1. 2003-04 rates are based on commodity by commodity matrix2. 2006-07 rates are based on commodity by industry matrix3. Negative value means that the good/industry is net subsidized.Source: Based on Input-Output Tables of India, CSO.Taxation of CoalA key component of the environmental taxes will have to relate totaxation of coal. In the Union Budget of 2010-11, for the first time thecentral government has taken the initiative of levying a cess of Rs. 50 per35
Page 6: with mobile firms, Wellisch (1995)
Page 12 and 13: With a reasonable change in the rel
Page 14 and 15: of state VAT, most states had agree
Page 16 and 17: commodities, common for all the Sta
Page 18 and 19: Reduction of indirect tax rates led
Page 20 and 21: 4. THE GST: THREE VERSIONSThe basic
Page 22 and 23: Table 2: Central and State Taxes to
Page 24 and 25: Table 3: Mechanism of handling Inte
Page 26 and 27: i. All public services of Governmen
Page 28 and 29: tobacco products. Following the con
Page 30 and 31: electricity duty levied by the Stat
Page 32 and 33: Any amount collected through these
Page 34 and 35: Table 7: Impact of the Green Shift
Page 36 and 37: happened with the relatively high o
Page 40 and 41: tonne on domestically produced and
Page 42 and 43: State Finance Ministers, The Task F
Page 44 and 45: GoI (2005), A White Paper on State-
Page 46 and 47: Appendix Table A1: Revenue Importan
Page 48 and 49: MSE Monographs* Monograph 1/2006A T

Accounting for India's Forest Wealth - Madras School of Economics

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