Finance Minister Criticizes Cross-Border Green Tax, Rules Out Big Budget
New Delhi: Union finance minister Nirmala Sitharaman on Thursday said that any move on imposition of cross-border adjustment tax by developed countries to meet their green commitments is morally wrong and goes against the interest of developing countries of ‘Global South’. Amid talks of a green goal, she also announced that the upcoming budget will be presented on February 1, 2024 which would not have any ‘spectacular announcement’ as it would be a vote on account in the run up to the general elections.
As far as the upcoming Budget for the 2024-25 fiscal is concerned, she said that it would be presented on February 1, 2024, which would not have any ‘spectacular announcement’, but the full Budget would be presented in July next year by the new government elected after the April-May general elections. “I am not going to play spoilsport, but it is a matter of truth that the February budget will just be a vote on account because we will be in an election mode. So the budget that the government presents will just be to meet the expenditure of the government till a new government comes to play,” Sitharaman said at the CII Global Economic Policy Forum here.
Traditionally, a vote on account is an authorisation for incurring certain expenditures required till a new government takes office. The governments in the past have refrained from making any major policy announcement during the vote on account, but there is no constitutional bar from making big announcements. Before the vote on account, the governments also do not present the customary pre-budget Economic Survey that traditionally is presented a day before the presentation of the full budget. The survey, which details the state of the economy and directional events, is presented when the full budget is tabled in Parliament in July.
On cross-border adjustment tax, she said that the developed countries’ move to levy a is against the concerns of developing nations. “However, the global thought process will have to be inclusive for countries in the journey to achieve green goals, rather than a single mono-sided decision to bring in a border adjustment tax. I want to make my industry green so I will impose on you a certain tax because you are coming up with non-green products and with that money I will make my industry green,” Sitharaman said.
The finance minister’s comments come in the backdrop of the European Union’s announcement to impose carbon tax on imports from certain sectors. “Every country will have to have resources generated to meet demands so that we are better adjusted to the green commitments we have made globally. But cross border imposition and that money going towards somebody else's green agenda, if anything, is not moral at all,” Sitharaman said.
The carbon border adjustment mechanism (CBAM) or carbon tax (a kind of import duty) will come into effect from January 1, 2026, but from October 1 this year, domestic companies from seven carbon-intensive sectors, including steel, cement, fertiliser, aluminium and hydrocarbon products, will have to share data with regard to carbon emissions with the EU. “The base energy requirements of a country cannot be filled by renewable energy sources, but it is possible to think in terms of spreading renewable energy in such a way that individual participation is ensured,” she said.
