Green tax: Make polluters pay

The health and economic costs of unbridled pollution are getting more severe with each passing day. If left unchecked environmental pollution may well lead to the stunting of our economic growth and even precipitate a serious public health crisis. Experts have been stressing for long that Bangladesh has to join the green economy bandwagon to counter the growing risks of environmental pollution. Against this background, it is indeed encouraging to note that the government is mulling the imposition of green tax to discourage pollution. The Environment, Forest and Climate Change Minister Md Shahab Uddin, speaking at a programme in the capital, said, "In terms of green tax incentives and the imposition of a green tax, the main objectives are to increase investment in the environmentally friendly technology sector; encourage industries to mobilize resources rich in green technology; and discourage pollution."

There is almost total unanimity among the experts when it comes to pointing to green taxation as a key tool for moving towards an environmentally friendly economy that favours sustainable development. There are a plethora of benefits of green taxes. They promote energy saving and the use of renewable sources. They discourage anti-ecological behaviour. They motivate companies to innovate in sustainability. They generate revenue for the government, allowing other taxes to be lowered or environmental projects to be carried out.

Green tax, experts believe, will go a long way in reducing pollution and encourage industries to set up effluent treatment plants. Currently, factories face one-off fines if they are found in breach of pollution standards, but allegedly more often than not, polluting factories get away scot-free by greasing palms of dishonest officials. Bangladesh is a country most vulnerable to the impact of climate change and environmental degradation. The costs of pollution are becoming more evident as they are constantly passed on to society, individuals and future generations. Ideally, the polluters should bear the cost. Therefore, there is a dire need to shift the tax burden towards pollution and resource use in order to help achieve the SDGs (Sustainable Development Goals), inclusive growth and circular economy.

Bangladesh has witnessed phenomenal economic growth in recent decades. However, we believe that the growth can be really effective when it is environmentally sustainable. Considering the challenges of environmental degradation, it is time to explore rebalancing our tax systems. A mechanism should be developed in our tax system where polluters pay more taxes, and there are more incentives provided for those industries which are the least responsible for pollution and are environment friendly. According to experts, green taxes have the potential to resolve dirty fuel, natural resources and water use.

The costs of pollution and environmental degradation are real. They come from unsustainable production and consumption that affects our health and the environment, but the polluters are usually not held accountable for them. It is the society and nature that pay the bill. Shifting taxation to environmental pollution and getting the prices right is a way to reduce costs on citizens and promote innovation and investment in a cleaner economy. The Polluter Pays Principle can be one of the key principles of Bangladesh's environmental policy – that those responsible for environmental damage should pay to cover the costs. Applying the principle means that polluters are incentivized to avoid environmental damage and are held responsible for the pollution that they cause. Assigning the right price to pollution, as required by the polluter pays principle, can be a key driver for cleaner production and consumption.

Green taxes are economic instruments to address environmental problems as they internalize environmental costs and provide economic incentives for people and businesses to promote ecologically sustainable activities. It must be ensured that the private sector does not see green taxes as a loss of competitiveness, rather as an intervention which can promote circular economy and in turn help Bangladesh achieve SDGs. Green tax can also help private enterprises to envision how they can transition to business models that contribute social and environmental value.