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Old 1st November 2011, 13:03   #1
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Thumbs down Govt plans to impose additional levies on diesel cars

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NEW DELHI: The finance ministry is exploring plans to impose additional levies on cigarettes and diesel cars, measures that some officials think could help it earn much needed revenues without stoking inflation or hurting growth.

Taxes on services could also be increased under these plans aimed at helping the cash-strapped government cope with lower-than-budgeted revenues in a slowing economy, two finance ministry officials familiar with the proposals told ET.
Source & Full Article - The Times of India

Last edited by GTO : 1st November 2011 at 15:51. Reason: Keeping the fair usage policy in mind, it is best to only include an excerpt + link to full article
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Old 1st November 2011, 14:34   #2
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Default Re: Govt plans to impose additional levies on cigarettes and diesel cars

Not the least surprised. The spendthrifts always need more money to waste and pocket.
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Old 1st November 2011, 14:38   #3
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Default Re: Govt plans to impose additional levies on cigarettes and diesel cars

An extremely good step IMHO. There is no way they can impose a dual pricing on the diesel. So increasing the taxes on diesel cars is surely the way to go. And I feel they should consider bringing the tax amount of B and C segment cars at par with the C+ segment as these are the volume segments.

Cigarettes: Well what to say! Please Make them as costly as possible by all means.
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Old 1st November 2011, 14:45   #4
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Default Re: Govt plans to impose additional levies on cigarettes and diesel cars

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Originally Posted by akshay380 View Post
...... The finance ministry reasons that since the government is not able to raise diesel prices, it is justified in levying more tax on diesel cars. Officials say raising levies on these items could be politically expedient and administratively simple
What about diesel cars in the used car market? If the government is not going to regulate the used car market, very soon we would see them compete with the realty industry

Last edited by Warwithwheels : 1st November 2011 at 14:47.
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Old 1st November 2011, 14:53   #5
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Default Re: Govt plans to impose additional levies on cigarettes and diesel cars

This is indeed a good step in my opinion.
Government can also think about imposing yearly taxes on Diesel Cars. The easiest way to do this is through the insurance companies.
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Old 1st November 2011, 15:10   #6
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Default Re: Govt plans to impose additional levies on cigarettes and diesel cars

A step in the right direction to reduce disparity. Although, implementation would still take a while IMO as there will be some factions opposing this move.

I quit smoking and about to buy my first diesel car! Talk about timing
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Old 1st November 2011, 15:18   #7
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Default Re: Govt plans to impose additional levies on cigarettes and diesel cars

I don't mind paying extra taxes as long as I know it's ultimately going to benefit me at the end of the day.

Unfortunately, in our country, that rarely seems to be the case. It'll most likely end up in some politicians pocket.
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Old 1st November 2011, 15:31   #8
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Default Re: Govt plans to impose additional levies on cigarettes and diesel cars

A very good idea IMO as taxing diesel directly will result in more inflation. But then the end result is what matters. Will it go into the politicians pockets or will it be given to the oil companies so as to make up for the loss from the sale of subsidized diesel and LPG, and also stabilize the price of petrol. (Just heard news of increase in petrol prices again!)
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Old 1st November 2011, 15:39   #9
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Default Re: Govt plans to impose additional levies on cigarettes and diesel cars

Petrol has been the government's pet whipping boy all along. No regrets if diesel is made to bear a certain amount of beating although indirectly through diesel vehicles. In addition to cigarettes, let the duty on all sorts of liquor also be increased.

Last edited by J.Ravi : 1st November 2011 at 15:46.
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Old 1st November 2011, 15:40   #10
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Default Re: Govt plans to impose additional levies on cigarettes and diesel cars

Although its a good move but dont know who would profit from this at the end of the day ?
Lets hope it dosent raise corruption .. In both the automobile and also the cigarete industries ..

Last edited by Enigmatic : 1st November 2011 at 15:42.
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Old 1st November 2011, 15:58   #11
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Default Re: Govt plans to impose additional levies on cigarettes and diesel cars

my few cents here
1) Extra taxes on tobacco products is always welcome for obvious reasons.

2) However, there is a contradiction when state governments are giving tax soaps and low cost lands for automobile production on one hand and the central government thinks of increasing taxes on diesel cars!

3) if they have to impose these taxes, they should use these for promoting research on a) road safety, b) mass public transport thats affordable as well as convenient, and c) alternate fuel tech research.

Taxation is useless without alternate ideas.
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Old 1st November 2011, 16:03   #12
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Default Re: Govt plans to impose additional levies on cigarettes and diesel cars

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Originally Posted by akshay380 View Post
NEW DELHI: ........There exists a waiting period of 2-3 months on most diesel models because of the steady rise in petrol prices. The government has been reluctant to increase prices of diesel for fear of stoking inflation. The finance ministry reasons that since the government is not able to raise diesel prices, it is justified in levying more tax on diesel cars. Officials say raising levies on these items could be politically expedient and administratively simple.

.... At present the duty on cars is based on the length and not the fuel. Small cars attract an excise duty of 10%, while cars with engine capacity more than 1500 cc attract 22% duty. An expert panel headed by former Planning Commission member Kirit Parikh last year recommended imposition of additional excise duty on diesel vehicles of up to Rs 80,000.
Ordinarily I would look askance at further government intervention in energy markets. However, as the central government maintains and will continue to maintain a differential pricing structure between petrol and diesel, additional duty on diesel cars (not trucks and commercial transport vehicles) may be a simple mechanism to .

There is some evidence that India's inflation is being stoked in part by supply side constraints (i.e. not enough goods and services being produced) which themselves have multiple causes like lagging/poor infrastructure in power generation and transportation, limitations of rail cargo capacity and ports infrastructure etc. So, refraining from increasing price of diesel may not necessarily hold back inflation. However, raising the duty structure on diesel cars would make a small dent in the fiscal deficit, which is welcome.


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Originally Posted by rameshnanda View Post
This is indeed a good step in my opinion.
Government can also think about imposing yearly taxes on Diesel Cars. The easiest way to do this is through the insurance companies.
I would agree with @rameshnanda that some form of annual taxation of diesel cars (not trucks or commercial transport vehicles) would be needed if the ever widening price differential between petrol and diesel is to be maintained without making fiscal deficit widen as well.

The perverse effects however would include older, more polluting diesel engine vehicles will remain on the market longer and there would be some increase in use of less environmentally friendly commercial transport vehicles in lieu of personal transport vehicles (perhaps in rural areas).

A similar effect was observed in the 1990s in the US where SUVs were under a more relaxed fuel efficiency norms vis-a-vis passenger cars (as the SUVs were classified as trucks for FE norms) which resulted in an explosion of SUVs. But that is .
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Old 1st November 2011, 16:04   #13
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Default Re: Govt plans to impose additional levies on cigarettes and diesel cars

Government planning to impose additional duty on diesel cars has been doing the rounds for quite some time now. I almost thought they will implement it back in July, but as always was postponed.

Sooner or later this was going to happen, when will it be implemented remains to be seen.
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Old 1st November 2011, 16:19   #14
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Default Re: Govt plans to impose additional levies on cigarettes and diesel cars

Higher taxes on tobacco and liquor is always a welcome move.

Diesel cars have been on the tax radar for quite some time now. Since increasing the price of diesel would be difficult causing rise in inflation , thus targeting diesel cars makes more sense , however as already mentioned in the thread most individuals would not mind paying an extra tax provided they get some direct/indirect benefit from the tax.
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Old 1st November 2011, 16:24   #15
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Default Re: Govt plans to impose additional levies on cigarettes and diesel cars

I don't think many people realize that the carbon footprint of a a diesel car is much less than that of a similar petrol car.
Sure, add a 50,000/year tax to diesel cars to dissuade people from buying diesel cars, but when all of them start buying petrol vehicles, its going to be problem, esp if India starts dealing in carbon credits and all seriously.
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