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2021 | OriginalPaper | Buchkapitel

# 4. Designing Ecotaxes in India: An Environmentally Extended Social Accounting Matrix (E-SAM)

verfasst von : Rajat Verma

Erschienen in:

Verlag: Springer Singapore

## Abstract

Designing ecotaxes requires an understanding of the intertwining relations between sectoral activities that generate pollution in the environment. An attempt is undertaken in this chapter to holistically construct an E-SAM for India. Using the methodology of E-SAM in such context is unique, and this is substantial improvement on the only existing E-SAM for India of Pal et al. (2015) by including significant environmental components, i.e. water and land so as to analyse their interactions with other sectors of the economy. Apart from a comprehensive dataset for designing ecotaxes, an attempt has also been made to arrive at potential tax bases and a theoretical deduction for the optimal rates of these taxes, thereby addressing the design issues related to these taxes. The E-SAM has 33 core sectors of the Indian economy along with three categories of labourers, namely unskilled, semi-skilled and skilled. Further, the E-SAM also has five categories of rural and four categories of urban households, and there are three environmental categories of air, water and land. The five foremost polluting sectors or tax bases were identified using the pollution coefficients from the E-SAM, and these are thermal (NHY-non-hydro), fertilisers (FER), iron and steel and non-ferrous basic metals (MET), paper and paper products (PAP) and textile and leather (TEX). Here, for the very first time, an attempt is made to construct theoretical scaffolding for arriving at optimal rates for ecotaxes which underscored the idea of redundancy of arriving at specific numbers of tax rates as these numbers are most desired ideal scenarios. Environmental taxes can be easily subsumed under the framework of the GST by providing a separate tax slabs for these taxes with the provision of using the proceeds from these taxes for revenue transfers and earmarking the revenue for environmental purposes.

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Fußnoten
1
The updated list of categorisation of the ecosystem functions is given by the Millennium Ecosystem Assessment Report which classifies it into provisioning, regulating, cultural and supporting services. This could be referred from: https://​www.​millenniumassess​ment.​org/​documents/​document.​300.​aspx.​pdf

2
Since E-SAM is just an environmental extension of a SAM, therefore, the fundamental methodology of matrix multiplier being at the core of SAM methodology holds true also for E-SAM.

3
Please refer to Sect. 3.​3 of chapter three for the definition of environment that has been adopted as per the EPA, 1986.

4
Technically satisfying the Hawkins–Simons condition would require all the principal minors of the I-A matrix to be greater than zero (Chiang, & Wainwright, 2013, p. 116-119).

5
This principle of a SAM could be simply remembered by concentrating on the English alphabet followed by C (representing column of the SAM) which is ‘D’, and therefore, the column represents demand. Similarly, alphabet after R (representing row of the SAM) is ‘S’ which implies supply.

6
The order of the matrices written in the subscript depicts the rows and columns of the E-SAM 2007–08 which have been constructed with 33 sectors of production and seven environmental sectors. For details, please refer to Appendix F

7
Please refer to Eq. 6 in sub-Sect. 4.4.2 so as to refer to its formula.

8
Please refer to Eq. 2 in Sect. 4.4.2.

9
Please refer to Fig. 1.​1, Sect. 1.​2 for a detailed explanation

10
Second best outcome will be a simple extension of the model proposed, if desired.

11
A detailed understanding of the sustainable rate of profit has been put forward subsequently.

12
This is equal to zero because $$\left( {\frac{1}{{V_{ot}^{*} }}} \right) = R_{p} .D_{m}$$ in the Pigouvian framework and the rate of pollution (Rp) and per-unit damage (Dm) are not the function of Rt

13
Inefficiency in terms of both collecting the tax revenue and also in terms of making tax payments costly.

14
Even though this compensation period of five years will come to an end in 2022, but the issue lies with the irrational approach of the government which could even have implications for any further environmental levies in India.

15
The utilisation of revenue transfer will be examined in detail in the subsequent Chaps. (5 and 6).

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