Institute for Social and Economic Change

Working Paper: 353

Ecotaxes: A Comparative Study of India and China

Rajat Verma



This paper attempts to compare various forms of ecotaxes adopted by India and China in order to reduce their carbon emissions by 2020 and to address other environmental issues. The study contributes to the literature by giving a comprehensive definition of ecotaxes and using it to analyse the status of these taxes in India and China. As per OECD-EEA database’s definition, in total there are only twenty-four environmentally related taxes that exist in both the countries. Of these taxes, five out of seven environmentally related taxes in China were revised after the year 2006, and in India all the taxes were levied only after 2002. In addition, as per our definition only seven and five environmentally related taxes in India and China, respectively, can be deemed as ecotaxes. There is a severe paucity of literature on analysing the performance of ecotaxes. Based on the limited literature, it was found that there are several governance related issues in India in managing the funds generated from the ecotaxes. In the case of China, studies reveal that the purpose of consumption tax is defeated as it leads to an increase in total fuel consumption and to a decline in social welfare.


Working Papers