Summary and Conclusions

Ecotaxes have undoubtedly arrested the environmental degradation in the countries wherever it has been implemented since past three decades. However, the issues as fundamental as non-acceptance of a uniform comprehensive definition and other issues pertaining to the ambiguity of its effects on the economy plague its adoption in the countries that have historically relied on command and control (CAC) measures, the prime example of which is India. In this chapter, attempts have been made to discuss these threadbare issues and their solutions, which were examined in this book by simulating the effect of ecotaxes on various stakeholders in India. The concerns related to designing of these taxes could be narrowed down to the notion of identifying the base and optimal tax rates. The pollution coefficients of the E-SAM resulted into the five most polluting sectors such as thermal (non-hydro), fertilisers, iron and steel and non-ferrous basic metals, paper and paper products and textile and leather. Their value of output was considered as the tax base. Through an elaborate mathematical derivation and visualising the suppliers as large and small scale, it was shown that the optimal rates are just a theoretical construct and is mathematically infeasible. Therefore, it is an idealistic scenario which is unattainable. The ecotax was found to be overall progressive, thus negating the equity concerns. The double dividend could be reaped, and the effect on export competitiveness is also minimal. Thus, it could be concluded that ecotaxes would prove to be the game-changer in arresting the environmental damage while ensuring that the growth is not traded off.