Reviewed by Sep 28, 2020| Updated on
Green levy seeks to encourage corporations to adopt eco-friendly technologies. Green levy is a tax imposed on corporations and other enterprises to curb pollution and carbon emissions.
Understanding Green Levy
Green levy is a way for governments to make corporations socially responsible. It is to ensure that the corporations must factor in environmental costs associated with their industry. The most common form of the green levy is the tax imposed on fuel-inefficient vehicles.
Factors to Consider
Green levy is a compensation associated with the carbon footprint.
Taxes are imposed on electricity and petroleum to encourage the usage of wind power or solar power.
Green levies can result in high prices of goods as the rich pay up for the taxes.
The levy may be on the prices of the goods or the gross income of a corporation.
One of the methods that governments apply green levies has been through carbon taxes, a system in which a business or private corporation has to pay a fee associated with the size of their carbon footprint.
Some of the examples of green levies imposed in countries across the world include Canada's tax on cars whose fuel consumption was greater than three gallons for every 62 miles. Germans have passed taxes on electricity and petroleum, while renewable sources of electricity were not taxed. Germany also imposed a tax designed to favour more efficient power plants and increased petroleum taxes while decreasing income tax.
There has been some disagreement as to whether these taxes if implemented, would be progressive or regressive.
Whether or not intended to be the case, taxes on consumption may inadvertently hurt the poor who end up saving less of their income and consuming more. The green levy or carbon tax has been criticised on the ground that these levies allow corporations and the rich to buy their way out of the effects of their activity while the poor would be adversely affected as they can't.