What is the issue?
The non-inclusion of diesel and non-fixed fertiliser rates shows GST is not environmental friendly.
What are the serious environmental issues with GST?
- The commodity value chain is inseparably linked to a more fundamental production process i.e the ecological production process.
- Goods and services provided for free to human communities by the ecosystem also comes under taxable product.
- The GST imposed on commodities that are pivotal to livelihoods for forest tribes in India might not be too beneficial for the value-chain either.
- Infrastructure - GST will bring about more transportation of goods and demand for infrastructure.
- If road infrastructure growth brings about reasonable land use conversions without factoring in ecological concerns, the net result may not be ecologically favourable.
- Clean energy - Diesel is not clean fuel and it does not comes under GST taxation, but under proposed structure there is 5% tax on solar and wind energy.
- The carbon tax (or coal cess), which was thought to be a source of funding for clean energy projects through the National Clean Energy Fund, will now feed the GST Compensation Fund — a fund meant to compensate various state governments for any loss in revenue arising out of the goods and services tax.
- With the costs for coal projected to fall by almost 7%, the GST regime clearly moves the “terms-of-trade” in favour of coal from the cleaner sources of energy.
- Chemicals - On the other hand, a 12% GST on fertilisers, up from the 4-8% rates escalates the prices of fertilisers.
- As per certain estimates, the prices for urea, the most commonly used fertiliser, may increase by Rs. 300 to Rs. 400 per tonne.
- Most States did not levy any value-added tax (VAT) on micronutrients, organic manure and bio-fertilisers, the 12-per cent GST rate will mean a rise in retail prices of these minor fertilisers.
- Tobacco -The tax on tendu leaf, a Minor Forest Produce (MFP) used to roll beedi, which is the financial lifeline of many tribes of Central India is now set at 18%.
- When the government has already imposed 28% on finished beedi with the health concerns with tobacco consumption looming large.
- The 18% GST on collected tendu leaf selling goes against the fundamental essence of equity under which Forest Rights Act (FRA) of 2006.
- This act exempted incomes obtained from sale of non-timber forest products from taxation.
- GST on tendu leaves is akin to taxing ecosystem services, which provide livelihood to poor.
Source: Business Line
