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Old 29th July 2014, 20:21   #31
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Default Re: Proposal: Private vehicles need not pay toll; instead, extra tax on new cars

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Originally Posted by Dry Ice View Post
All this to remove congestion at tolls? What happened to the proposal to centralize the collection and use of RFID tags on all tolls?
It is a gimmick - actually government is benefit by the long ques of the toll booth. Long que means longer idle times = more fuel consumption (more tax) = more revenue. By reducing the waiting time at toll plaza, they dont gain anything, rather they loose the extra tax that is earned by you wating and burning fuel for 30 mins in the que. You are bound to pay toll, be it now or after waiting in line for 30 mins. Govt gets the same revenue. Once cannot bypass toll at all, irrespective of the queue.

There is also a secondary revenue in the form of "cut" that is given to influential people by the various fruit / nut / drink / munchies vendors near toll plazas. People waiting in traffic jams tend to purchase some items from those vendors.

I personally prefer the RFID prepaid or "postpaid - charge to credit card" concept. Even if there are traffic jams, at least i need not bargain for change or be forced to accept chocolates in return for coins.

Also instead of focussing on traffic jams in the city everyday, I dont understand what logic prompted someone to analyze traffic jams at toll plazas. Anyway, govt vehicles honk thier way out and need not pay toll. I am sure someone noticed a money-making machine hidden in this rule.

Last edited by scopriobharath : 29th July 2014 at 20:27.
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Old 29th July 2014, 20:49   #32
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Default Re: Proposal: Private vehicles need not pay toll; instead, extra tax on new cars

Another move from the government to get away from the responsibilities. If there is toll collected for a road or a bridge under BOT, it is the duty of the toll collector to ensure the maintenance of that road/bridge as well. In case they are not doing it, they are liable to penalties and other measures from government or the courts depending on how the public routes their complaints.

The moment the toll collection becomes centralized, these guys can escape the responsibility by colluding with the government officials since the transparency would be gone regarding where the money goes. If it is collected as part of taxes, then it should be called out as part of the budget to be eligible to be spent on the same. Otherwise, it is likely to be 'misused' elsewhere.

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Originally Posted by anilagdr View Post
Government of Kerala have revised the mode of road tax calculation. Until last friday the tax was calculated as a certain percentage of the basic cost of a car, but now it is calculated as a percentage of the ex-showroon price of the car. This has resulted in an increase of Rs, 13000/- on the cost of Honda city VMT diesel that I an due to take delivery of.
I think it used to be based on the ex-showroom price even earlier, but they just increased the percentage. I remember paying 6% of showroom price for our Swift back in 2008 when we bought it, but it is now something like 10% or even more, depending on which slab your vehicle price belongs.

I think above and below 10L are different categories and the City VMT diesel would have crossed over into the higher 10L+ territory, while petrol variants used to be under a different sub-10L bracket all along.
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Old 29th July 2014, 20:59   #33
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Default Re: Proposal: Private vehicles need not pay toll; instead, extra tax on new cars

Here's a scenario. Suppose the tax is introduced. What happens to the existing toll gates? The government has given them permit to collect toll for several years. If these guys are to be paid off immediately, from the govt's (read: our) own pocket. The new tax cannot be effected on cars already on the road, instead it will be paid by new buyers who might not even pass one toll gate in a year. Not to mention the thousands of jobs (toll gates run round the clock) that put food in these peoples mouths. And what if the governement decides that the system doesn't work and repeals the law? Are the car buyers who paid the tax going to be paid back, with interest? Not at all, because that's how the government works.

Even though I dislike slowing down to pay tolls, I am totally opposed to this scam of a proposal, aimed at punishing car buyers for working hard enough and making enough money to own a car.
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Old 29th July 2014, 21:05   #34
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Default Re: Proposal: Private vehicles need not pay toll; instead, extra tax on new cars

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Originally Posted by zenren View Post
I think it used to be based on the ex-showroom price even earlier, but they just increased the percentage. I remember paying 6% of showroom price for our Swift back in 2008 when we bought it, but it is now something like 10% or even more, depending on which slab your vehicle price belongs.

I think above and below 10L are different categories and the City VMT diesel would have crossed over into the higher 10L+ territory, while petrol variants used to be under a different sub-10L bracket all along.
From this year onwards following a rise in the percentage of road tax, the calculation was changed to be based on the basic price of the car. Yes, earlier, as you said the tax was based on the ex showroom price. Now they have brought back that calculation with the enhanced rate of tax percentage.
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Old 29th July 2014, 22:04   #35
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Default Re: Proposal: Private vehicles need not pay toll; instead, extra tax on new cars

Nothing doing, I don't agree.

Instead, IMO they should have a mixture :
  • A flat Fixed 6% Road Tax all over the country (for maintaining less used sections of the state highways),
  • Tolls for every highway based on whatever the private company is contractually allowed to charge (they'd have achieved Road Contracts through competitive bidding), and,
  • A Congestion Fee for all major city roads.
They ONLY need to figure out a fast and simple way to collect toll payment. Something as easy & fast as swiping a credit card.

IMO given the massive number of vehicles, this kind of setup is definitely viable through activity based costing. This would also make it abit more affordable for people to change states & re-register.

Also,
  • Why should I be compelled to pay for highways that I'm not going to regularly use?
  • Why should the government keep increasing the capital expenditure burden on people?
Govt should infact concentrate on making transport related costs variable such that :
  • More people can afford to travel - Since Fixed Costs have been turned into Variable.
  • People can afford to travel better i.e. they can use cars that they can't afford through rented Self-Drive services.
  • Capital is freed up in the hands of people, hence they can invest in capital markets or save in FD's.
We all know the expertise of govt when it comes to evading from responsibilities after collecting hefty taxes, so WHY pay them in advance?

Last edited by GrammarNazi : 29th July 2014 at 22:08.
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Old 29th July 2014, 22:15   #36
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Default Re: Proposal: Private vehicles need not pay toll; instead, extra tax on new cars

What if I don't want to use the highways or tolled roads? Why should I pay more?
Toll should be on an as-use basis, introduce e-toll collection, it would surely increase efficiency of collection and reduce traffic at toll booths.
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Old 30th July 2014, 09:11   #37
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Default Re: Proposal: Private vehicles need not pay toll; instead, extra tax on new cars

I dont understand one thing - Why are only private vehicles taxed?

is it not simpler to tax every vehicle, right from two-wheelers to 25-wheelers and totally do away with the toll-gate?
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Old 30th July 2014, 15:45   #38
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Default Re: Proposal: Private vehicles need not pay toll; instead, extra tax on new cars

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Originally Posted by scopriobharath View Post
I dont understand one thing - Why are only private vehicles taxed?

is it not simpler to tax every vehicle, right from two-wheelers to 25-wheelers and totally do away with the toll-gate?
The OP states that the private vehicles will have to pay some one time extra charge (say 2%) and all others will continue paying toll at the booths.
So,
1. There is no loss of jobs at the toll-booths
2. Toll fellows will continue getting their money (but reduced by 14% or so)
3. Low usage travelers who are not contributing much to the toll are hardly affected, but they would save time in some cases.
4. High usage travelers will rejoice since they may pay less*

*2% of the value of the car creates a problem (BMW v/s Alto comparison made earlier) and that is a problem which needs to be solved.

I am not sure who will bear the cost of RFID tags if it has to be done pan-India.
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Old 30th July 2014, 16:40   #39
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Default Re: Proposal: Private vehicles need not pay toll; instead, extra tax on new cars

Some thoughts, having practiced a bit on infrastructure law.

To a car owner all toll-stations seem alike but the legalities for each can be very different. Toll roads in India come in a few flavours:

(A) Tolls collected by the Central / State government (i.e. they receive the money directly -- although the physical collection can be outsourced to a private operator) -- best example is Mumbai-Pune expressway

(B) Tolls collected by a private contractor who has also developed (or modernised) the road -- best example is NH8 stretch from Delhi to Gurgaon where DGSCL (private company) modernised and were granted rights to collect toll.

The risk / rewards of Tolled Roads of type A above are borne by the Central or State Governments directly (For Centre it is NHAI and for states it is State Infrastructure Boards or Department of Transport). In some cases they construct the road directly, in most cases they engage contractors like Gammon India, SEL, etc. who are pure contractors and are paid a fixed fee. In some cases the contractor also manages the tolling but bears no liability if the toll collection is low (due to low usage).

In type B roads the contractor usually undertakes a traffic study before bidding so as not to get into road development where traffic is likely to reduce. In such cases they have a fixed obligation to either the state or central government (vis-a-vis quality of road, material used, etc.) but must recover their costs and make profit only from toll receipts.

In the private sector the type A roads are usually termed 'annuity' road projects (to reflect risk of not getting paid the lump sum by the Centre/State governmennt) and the type B roads are termed 'toll' projects (to reflect risk of not getting toll).

So using the permutations and combinations we could have

Central road -- Toll goes to Central Government (A)
State road -- Toll goes to State Government (A)
Central road -- Toll goes to Private operator appointed by Central Government (B)
State road -- Toll goes to Private operator appointed by State Government (B)

From my experience I have observed that the vast bulk of road projects in the country is Type A. Pure toll projects where it is in the interest of the toll-collector to increase traffic are few.

Now to move on to car taxes. Car taxes include both central taxes (excise) and state taxes (eg. road tax, octroi). These are collected together by the manufacturer / dealer but paid separately to respective governments.

Re the proposal that OP has mentioned, I could frame the following questions:

(1) Is it possible (practical) to increase central / state taxes (or institute a central / state cess (i.e.tax) on new cars) and reduce the toll rates on (respective) central / state roads?

A: Yes, it is not difficult at all except that practically a central cess can reduce toll rates for central roads only and a state cess can reduce toll rates for state roads (within the collecting state). This is easiest for Type A roads. For Type B roads reduction in toll rates would require renegotiation of terms with the road developer which could become prolonged. However given how few type B roads there and the existing interest of the type B road developers in type A projects I do not believe that it would be very difficult.

(2) Is is possible to increase central / state taxes (or institute a central / state cess (i.e.tax) on new cars) and reduce / eliminate toll rates on all roads?

A: Very unlikely given that this would not only depend on the state government reaching an understanding with the central government but also the fact that state governments will be reluctant to share state cess from cars sold in their states with other state governments (to offset reduction in toll in the other state). For it to work all states would have to agree that the aggregate of the state cess collected by them would be pooled into a single fund from which they would receive payouts proportionate to the length of tolled roads they have (bit like Finance Commission which apportions part of centrally collected taxes to states).
The most likely possibility is for the central government to reduce / eliminate toll on central A and B roads by levying a central cess.

(3) Is this idea desirable?

A: Well judging from the comments on this thread this is a hot potato among BHP-ians All I can say is that there are millions of public utilities that we do not even know about let alone use for which we are being directly and indirectly taxed / cessed.

For eg. -- We pay an education cess with income tax but many of us (or our kids) do not go to government (or government-aided) schools. So we are cross-subsidizing someone else's education.

Or going by the budget 0.1 paise of every rupee you pay as income tax is used to modernise and renovate museums. How many of us regularly visit museums? Same is the case with development of railways or primary healthcare in rural areas. A well-to-do city dweller could argue that he gets zero benefit from utilisation of his tax rupees towards such utilities.

Or take the case of a few fractions of your tax rupees being used for opening an embassy in New York that 99 % of taxpayers will have no occasion to use or derive benefit from.

By the way, just for info there are similar laws already. Under the Central Road Fund Act, 2000 a cess is collected on sale of motor fuel to be used by the Central Government for development of roads (mostly national highways). Is that unfair on people who barely use NHs and mostly do city driving -- I guess it is. Point is that there is no end to uncovering 'public utilities' that you pay for but don't use.

My view is that if we had to ensure that tax money paid by a tax payer is used only to benefit utilities / services a-la-carte that he or she specifically uses or befits from it will be impossible to run a country.

I hope this helps form a view.

Last edited by Kumar R : 30th July 2014 at 16:47.
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Old 30th July 2014, 17:25   #40
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Default Re: Proposal: Private vehicles need not pay toll; instead, extra tax on new cars

Didn't they say before elections that they would look into abolishing income tax? Now they are creating another tax?

BUT, I support this move. Everybody here is missing the forest for the trees. The new system would bring in simplicity, and a simple system is easier to implement, which increases efficiency (do away with most of the toll gates), and troubles people less. Simpler laws decreases corruption.

Now, any law, or tax, would be unfair to a certain amount of population, especially those who does not benefit from it. But, what if M Ambani says, "why should I pay crores in tax, while I do not get anything in return"? People are taxed not because they deserve to be taxed, but because they can afford to pay. No tax system in no country is fair, not even in the famed USofA.

Finally, wouldn't it be a bliss driving non-stop on toll roads?
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Old 30th July 2014, 17:31   #41
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Default Re: Proposal: Private vehicles need not pay toll; instead, extra tax on new cars

I feel the need to tax car users in cities like Delhi is much more than the tolls. I fully support the move. Increase of fuel prices is in any case a given, it makes no difference as to what purpose it is being used.

The congestion in cities would come down only when the public transport is robust, coupled with taxing users of congested roads, as in London.

In spite of giving tolls, the roads are not always in great shape. I found this in many cases in Rajasthan and Himachal.
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Old 30th July 2014, 17:34   #42
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Default Re: Proposal: Private vehicles need not pay toll; instead, extra tax on new cars

Govt. should first respond what they did with education cess? I am pretty sure this extra charge again will go to the govt. expenditure's black hole than used for building roads.

The current toll system at-least has a theoretical incentive to build and maintain roads by private sector.
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Old 30th July 2014, 17:54   #43
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Exclamation Re: Proposal: Private vehicles need not pay toll; instead, extra tax on new cars

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Originally Posted by blacksport View Post
Finally, wouldn't it be a bliss driving non-stop on toll roads ?
True, but it would depend on enforcement of lanes at the tolls.

Despite all tolls having lanes for different vehicle types, currently it's a free-for-all, with vehicles making a beeline for the shortest "queue".

If lanes aren't enforced at the tolls, the chances of cars / private vehicles getting stuck behind commercial vehicles is still quite high.

P.S. - Personally, I prefer the existing system - you pay for what you use, can't get any simpler than this...
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Old 30th July 2014, 19:36   #44
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Default Re: Proposal: Private vehicles need not pay toll; instead, extra tax on new cars

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So if I buy a Alto for 3L I pay 6000 as one time toll tax & if I buy a 30L BMW, I pay 60,000. In the current situation, a Alto & a BMW pay the same toll passing though toll plaza's. Seems like the BMW guy is being penalised for being able to afford one especially since the government is not going to give the BMW guy a separate & better road to drive on! It's possible I will upgrade to a new car before I complete the 60,000 paid by me and when I buy a new car, I pay again! So practically, it's not a one time toll but I pay toll every time I buy a car & compared to the current set up of toll plaza's, I will be paying more as toll? That doesn't sound like a good deal to me. For someone like me, I pay Rs.1000 as toll pass for a month. So it would take me 5 years to recover the 60K I paid? That's assuming I have only one car and it's a BMW
Pretty good insight, if 2% is implemented on new cars, then who's gonna pay for the millions of wheels already rolling in the country. Better bet would be to implement it in fuel price- toll tax as a fixed amount not as % would be a win-win situation for a Alto to Diesel 3 Series owner. But here comes a further complicated question - "Motorbikes & CV's". If they maintain two different rates for fuel, then its just Sunshine & Puppies for the black market.
Automatic Toll Booths can only be a practical outcome- A scanner just scans the QR code or Bar code embedded on either the wind shield or number plate and deductes money from the credit card associated with that. But considering its India it will take another decade or so for any kind of possibilities like this.
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Old 30th July 2014, 22:10   #45
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Default Re: Proposal: Private vehicles need not pay toll; instead, extra tax on new cars

[quote]
Quote:
Originally Posted by rpunwani View Post

I am ok with raising the fuel surcharge and dispensing with the tolls completely. Multiple benefits of not having toll collecting stations are:-
1. No obstructions on the road/highway
2. Saves valuable travel time
3. No accumulation of trucks on the highway (general seen near the toll stations)
I kind of disagree with the above points , the proposal is to eliminate only "private' vehicles from paying tolls , which means commercial vehicles still have to pay tolls and so the toll booths will not go away , even if they have 2 out of 5 booths in a particular toll plaza specifically for commercial vehicles , it will still cause a huge line of slow moving trucks each waiting for its turn in those 2 booths.

Charging flat 2% toll tax on new private vehicles is such an unethical idea , it is of course easier for the government but it does disadvantage vehicle owners who never venture to the highways or uses the highways very infrequently.

I think policy makers must grind their grey matter more than just pick the next idea that comes to their minds.
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