Theory and Impact
Edited by Larry Kreiser, Soocheol Lee, Kazuhiro Ueta, Janet E. Milne and Hope Ashiabor
Chapter 17: Exploring the need for direct tax incentives for plastic waste management in India
About 9 percent of municipal solid waste in India consists of plastic waste, which amounts to about 10,000 tons per day. This waste is landfilled, recycled or incinerated, thus creating a large amount of pollution. The few measures to handle this waste include efforts by entrepreneurs to convert the plastic waste into more usable products such as fuels and road construction material. The policy approach to solving environmental problems has been through command-and-control measures, negotiations, economic instruments, environmental taxation and incentives. There is a fair amount of literature on the use of command-and-control measures, economic instruments and environmental taxation. While each of these has its pros and cons, there is need for a concerted policy using all or most of these measures in proportions customized to the context to achieve the environmental goal. Of these measures, there is relatively less information on the concept of direct taxes as a source of incentives to businesses engaged in cleaning up the environment or in creating positive externalities. In practice, many economies have used direct tax incentives to provide incentives for ‘good’ environmental behavior. This chapter first tries to understand the importance and benefits of plastic waste management within the larger canvas of municipal waste management. It then looks at the various ways and means currently in practice to tackle environmental issues and focuses on the usage of direct tax incentives (DTI) to encourage businesses engaged in plastic waste management.
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