Kathmandu, June 12: Nepal has achieved a significant milestone in environmental taxation, collecting nearly Rs. 2 billion as a green tax on diesel and petrol during the current fiscal year 2081/82. According to Nepal Oil Corporation (NOC), a total of Rs. 1.91 billion was collected by mid-May, with expectations to meet the target of Rs. 2.40 billion by the fiscal year’s end.
The green tax, introduced at a rate of one rupee per liter on diesel and petrol, aims to address environmental concerns by discouraging pollution and promoting cleaner energy. NOC’s Executive Director Nagendra Sah confirmed that the tax is collected at customs points where fuel is imported and is directly deposited into the government’s account.
Increasing Revenue and Environmental Impact
The government initiated the green tax through its fiscal policy starting in May 2024. Compared to the previous fiscal year 2080/81, when Rs. 290 million was collected, the revenue this year reflects a nearly sevenfold increase, underscoring the government's commitment to enforcing environmental regulations.
Aligning with Global Principles
The green tax is based on the "polluter pays" principle, an internationally recognized framework that encourages polluters to bear the cost of their environmental impact. The policy not only aims to reduce pollution but also seeks to diminish reliance on fossil fuels and promote the use of clean energy alternatives.
Tax Burden on Consumers
While the green tax serves as an environmental measure, it also adds to the financial burden on consumers, who already pay various charges, including infrastructure tax, road maintenance fees, and environmental charges. The cumulative effect of these levies highlights the need for a balanced approach to taxation that considers both environmental goals and consumer affordability.
Expanding Tax Coverage
The green tax applies to various petroleum products, including diesel, petrol, coal, furnace oil, base oil, and lubricant oil. For certain products, the tax rate is 0.5% to 1%, reflecting the government’s broader strategy to address environmental degradation. These measures are expected to generate sustainable revenue for environmental and developmental initiatives.
Looking Ahead
As Nepal progresses toward greener policies, the significant collection of green tax signals a positive step toward addressing climate challenges. However, ensuring that these funds are effectively utilized for environmental conservation and clean energy projects will be crucial to realizing the policy's long-term benefits.
Ecosphere News will continue to monitor and report on the outcomes of Nepal’s green tax initiative and its impact on the environment, economy, and society.
