A couple of day ago, we had reported about government evaluating the possibility of levying an addition tax of Rs. 80000 on diesel cars. It may be noted that there is wide gap between the prices of gasoline and the stickier fuel and this has really boosted the sales of diesel vehicles in recent times. Read here for more info on this topic
We have been getting a lot of response from our dear readers on the possibility of this additional tax that diesel car buyers might have to pay. Here, we are publishing the response that came from the intellect that our reader possess:
Sanjay : Solve a problem by creating a new one! Only in India!All these problems will go away if govt. stops subsidizing things.Subsidies distort markets and in the long run they create more problems than they solve. Just because the idea seems very noble doesn’t mean it is practical – ask any communist.
Soulie: Stupid myopic policy again. What is the total %ge makeup of diesel usage by car owners? Is it even comparable to industries which are increasingly using diesel to run their generators? What about huge IT parts that run their generators on diesel to provide 24×7 backup? With the power sector not adding capacity, this is only going to get worse!
Car owners form a miniscule part of the overall diesel pie and levying such premiums on vehicles is doing no good what so ever.
These are all just symbolic actions and Congress doesn’t want to tackle the real issues.
Vaman M Kini:They must hike prices something like the slab rates of tax or like Road tax. 1-5lakh, 5lakh-1Olakh.. different % on slabs! Its the best bet…
Satish: Good news but bad calculations! This would definitely revert may diesel hatch buyers. But how would Govt deter luxury car buyers like BMW, Audi who can easily spend more on petrol fuel but they don’t. They are not farmers. And they won’t feel pain buying diesel one as they would hardly pay 1% more with 80,000 price hike. The number of luxury car buyers may not be as large as hatch buyers but is Govt serious? “Why should super rich have all the fun?”
Arnob: Maybe diesel should have the govt taxes removed (excise, octroi, duty etc)- and once this is done the oil companies can make a healthy profit per litre if the price does not change.
Anuz: That is actually a good news. Diesel which is a subsidized fuel should be used for agriculture, defense and public transport not for personal use. moreover you often see misuse of diesel cars leaving cranked engine for hours to run AC only by diesel taxiwallah. Now they have to pay 80K extra already thus, it will minimize the difference
New comments:
Revron: First of all Diesel price is not subsidized! Yes…! If a thing costs 100 Rs. & govt pay Rs 20 to customer, & customer buy it for Rs. 80, then it will call as subsidy.
Here Govt taxes 100% on Rs 30 fuel, gross cost it to Rs 60, then give some pseudo benefits of Rs 15, and Customer pays Rs 45 at the end. And here we tells other, Govt “SUBSIDIZED” diesel…
Does it really???
Aditya:Well said Revron, now if the government is so hell bent on narrowing the fiscal deficit, they could tax more on things that are harmful(Cigarettes,Alcohol,Gutkha){No hard feelings, even i do smoke cigarettes & wont mind paying extra} and manage the deficit for the fuesl. However I doubt that the government is going to be concerned one and just want to fill up their coffers.It wont be long, before a PIL is filed in supreme court to make the Government realize that it is of people, for people & by people.
Prasanna Desigan: I am not sure whether the government is trying to save Diesel for future use or to reduce the loss of Oil companies. As another reader has told Luxury car buyers are not going to be deterred by this move. Similarly we need Diesel to be saved for future as there are certain things like Generator and other stuff that cannot be run on Petrol. The Government must start subsidizing CNG/LPG/Electric vehicles, provide more infrastructure for the same. This will automatically bring down Diesel usage and loss due to low cost Diesel.
Sachin:If govt.is going to do such acts its better they deregulate the diesel prices. Putting such heavy taxes will kill small diesel hatch market & will encourage fuel mafia who pay “hafta” govt officials.
Now truly we must look forward to electric vehicles against such govt policies.
Vikram:The government is just fooling around, they are just trying to make a fuzz so that the focus of people changes from their corrupt practices. They are showing that they are keen to save fuel by idiotic practices
Rahul:If i ain’t wrong the last general summoned to India Lord Mountbatten said that they are leavin the country in the hands on fools.. I guess he was right.. I feel ashamed of this but this is a fact..I know that subsidies have to be given to the needy and hence govt subsidies diesel keepin farmers in mind..But the new stupid policy just ruined it for the “AAM AADMI”..who as the sayin goes takes birth as a common man, lives like one and dies as one as well.. nobody cares for what are his needs.. Govt atleast cares for the farmers but what about an avg Indian who toils his entire life just to get a house and a car..??Govt should have adopted better policies against this..As someone mentioned above they could have easily gone with slab’s like 5% increase under 5lakh, 10% till 10 lakh and 20-25% for above cars.. a person buying a car for 3lakh will have to shell 3.8 for it and it will hurt him a lot.. But a person buying a 5 series for 50 lakh will not feel any difference if he pays 80k more..
Yila: Government is gradually and unashamedly becoming a Day-light-robber of poor peoples’ earning. Nationalised Banks are giving millions as “collection-free” loans to anti-social elements, but middle-class and lower-class people have to repay those debts indirectly through means like this. Poor corrupt Financial Scholars! Need to wait for another fight for freedom.
Satish: My post on earlier topic – https://www.motoroids.com/news/diesel-prices-to-be-deregulated-step-by-step.html
“In principle I do agree deregulation of diesel. I am still paying for billionaires fuel through subsidy when I don’t even own a four wheeler (forget diesel one). There are lot of people like me in this country. Taxes can be a point of discussion as Govt also need earning to run its affairs. But Govt must incentivise and promot “Green” vehicles ahead of deregulation so that inflation is controlled. The Green vehicles include CNG, LPG, electric, hybrid, solar powered ones. There are 100s of scientists waiting for research opportunity in this area. Also a number of companies would get lined up for its cheap development if Govt promotes it. Why we are spending time on diesel price should be regulated or not? We are light years behind in terms of sight.”
As Prasanna said, we must create infrastructure for LPG/CNG/Electric vehicles and even Solar/Hydrogen powered as well.
Sid: This is a nice step. Given that Diesel is heavily subsidized for commercial vehicles and agriculture and there is no efficient way to have two different pricing for different target audience, it is wise to increase taxes at the source i.e. vehicle purchase. Very nice move.
Vishnu: Instead of promoting investment in NEW technologies to help develop FUEL cell technology, INDIA will not invest in anything, but will grab money from the people. What does it intend to do with 80000Rs? And then it will bar foreign companies with the technical know how to enter the country or impose 125% tax, to prevent its widespread usage..They could also revise fuel taxes, but India gets almost all its money from the fuel tax we pay. So again it can’t do it…Basically the Government is F$$ked up, and so is the state of our nation!
Bineesh Bose: This just an another drama to increase the bank balance of our politicians. Guys wake up look around does any other country has this much tax? We are paying a 100% tax when we buy a car and road tax extra for up coming years in advance also more than 50% tax each time when we buy fuel. Where does these taxes go? Are we getting any facilities back in return? And now they want to increase it. This is India’s Democracy !
Anuz: @sanjay: subsidies diesel is necessary for agriculture otherwise, whole agriculture infrastructure can be affected by it. if you sell subsidies diesel only to farmers , it will leads to black marketing this problem was not started yesterday but at least 10 years back. I talked today with some persons and one
guy told me that he was against to bring cars in diesel versions (specially hatchbacks and other passenger vehicles) since beginning .
that thing is that isn’t disclose non-future vision of our govt. first they allowed diesel engines in cars , earned extra duties, extra registration money and now when they found everybody is looking for cheaper fuel alternate they hiking more prices. what a stupidity . why did they allow diesel cars since beginning
@Soulie : diesel cars most of times are owned by 1. long runner 2. taxi wallahs and trust me, most of the taxi wallahs do not pay tax even I know many of them do not have even taxi numbers in my own town whereas, IT sectors does so its not exactly right comparing IT sector with taxi walla
@Vaman M Kini: I appreciate that though, it should be categorized according to capacity of engine e.g.
who buy a 10-12lakh 2.2 liter SUV can also afford 11-13 lakh somehow.
@satish, vikram, rahul, yila . well said mates.
@satish: I do not think LPG is a true alternative of car fuel. its imported so not every cheap, if used in excess then it will effect supply of domestic gas. EVs are best option . install 2 x 1 kw solar panels at home to make it 101% green but, is really govt. encouraging EVs ? can they off duties and all taxes from EVs ?? I do not think so.
@Vishnu you are absolutely right.
Amit: I think govt. should work in decreasing the uses / consumption of diesel by promoting other fuels.i think subsidizing electric vehicle and CNG gas is a better option. also govt. should promote CNG in other states of India.
Soulie: @anuz – Things have changed now is what i strongly feel. Look around you and you will realize that everyone who is booking a new car is looking to book a diesel. All my colleagues and the ones in family are throwing all other calculations out the door except the price difference between a liter of petrol & diesel and the difference in mileage of cars with these engines. They are just blinded by the fact that petrol will never ever be rs.50/ltr again. That explains the frenzy in the demand for diesel cars. I’m not sure that the number of taxi wallahs or long distance commuters have suddenly increased to a proportion where MSIL is signing a sourcing agreement to source 1lakh DDiS engines from Fiat.
Vikram: The whole system of subsidy is the reason for all this mess, I think it should be stopped at front. If the government really wants to provide some help to needy ( farmers and the poor people ), the government can simply give them the money to buy it at the market price.
This way there is no chance of any black marketing or discrimination in taxing
Ricci: Cringworthy tactics by apni gober-mint.First off , we pay more for cars than several other countries , and we get much less in return for the monies in terms of roads and vehicular traffic related infrastructure. I mean – when did they start getting the E-way , GQ etc projects started ? While parking charges are still thankfully lower than Europe, they’re inching there slowly, because politicians are the land-mafia and they have all their fingers in ghee , won’t give up the lucrative easy income (eh, extortion) from charging people to park their beloved.
Now they want to burden already squeezed buyers with addtional diesel tax, when they themselves created this sordid mess by pricing petrol and diesel vastly apart – oh, so now we 2 wheelers who use petrol are subsidizing the diesel Audis and Fortuners and Vernas ! wow , gober-mint – robbing the poor ( or less well off ) to pay the rich !
When I buy a car, and this year I was giving it a serious thought, with the diesel-petrol pricing Grand Canyon , I have to go diesel.
To those who think someone paying 8 lacs for a car can easily pay 9 lacs ( adding the 80k diesel tax ) or one who can pay 12 lac can also pay 13 lac – I will say this : we are all not made of money. Most of us buy on loan, that extra money does inflate the EMI , and it also adds to other things which are based on % of vehicle price, so expect RTO charges, road tax and insurance to also increase with the 80k diesel tax , so it will likely add 1 lac more the price tag. Somebody can pay their kids school fees instead of feeding the wasteful government which will squander away this money and in a few years you will hear of the diesel tax scam.
We quite agree with the view points of all these readers and we appreciate the fact that they have made us think more on this subject.
We would also like our other readers to come up with their views and suggestions on this topic. The same may be posted in ‘comments’ section of this topic and we would transfer them into the main body of this article.
Looking forward to some really nice opinions.