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Old 8th June 2006, 13:52   #226
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Exactly,
Here the definition of essential goods is very vague.

Cement is an essential goods, and Petrol/deisel is not, Surprising but true. As though we build houses every day.
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Old 8th June 2006, 13:58   #227
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Quote:
Why can't government cut taxes to reduce the burden on common man?
Govt. and help the common man....hahahahahahahahahaaha! You dreamer you...
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Old 8th June 2006, 14:30   #228
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The worst part is that even if the international crude oil prices come down to $10 per barrel, the increased price would never come down
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Old 8th June 2006, 14:51   #229
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Quote:
Originally Posted by RX135
We all understand that nothing comes for free. Government says it can not cut taxes, because it will take a hit on revenue.
I am by no means an economist, but consider following example.
Let say, "X" consumes 10 ltr petrol at 10 Rs/ltr (hypothetical) with 10% tax. Total expenditure is 100 Rs. So government gets 10 Rs as Tax.
Price is hiked to 20Rs/ltr now. Poor "X" needs nothing less than 10 ltr Petrol, so he has to pay 200Rs now. Government gets 20 Rs as Tax now.
So with price hike, government adds its own revenue, which has nothing to do with loss making Oil companies. Why can't government cut taxes to reduce the burden on common man?
Ok, so let us assume that everyone knows that oil companies would go into huge loss, if price hike did not happen. Ofcourse the hike is not as much required to offset the losses due to world oil prices.

If you guys say govt should stop taxing petrol, then you should think about the loss of revenue for the govt. This revenue is used for all the citizens including "the Poor X". The govt cannot lower its revenue as the world oil prices go high.

Quote:
Originally Posted by Psycho
Interesting, yes we do understand why the price had to go up, but : Why taxes on essential goods???
I think LPG and kerosene is more essential as it is used as cooking fuel. As you know these are heavily subsidised. A good part of the revenue generated from taxing fuels, goes to subsidising these commodities.
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Old 8th June 2006, 14:59   #230
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Quote:
Originally Posted by mxx
If you guys say govt should stop taxing petrol, then you should think about the loss of revenue for the govt. This revenue is used for all the citizens including "the Poor X". The govt cannot lower its revenue as the world oil prices go high..
Unfortunately, it appears that you did not read my post completely. I had given logic as to why can't the government revenue go down despite tax cut. I am NOT saying that oil companies should go in losses and I am NOT saying that government should cut down on revenue. I am saying that government should revise the taxes accordingly.
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Old 8th June 2006, 15:12   #231
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Default Diesel Price in DXB = Indian Price

Diesel prices in the UAE have just had a VERY steep hike up to 12 Dhs per gallon, which is about Rs.144 for 3.75 litres. Thats Rs.38, which was higher than the price I paid in India recently.

Petrol stays unchanged at about Rs.22 for 98 Octane.
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Old 8th June 2006, 15:33   #232
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At this rate, the Indian economy will slow down sooner than expected. The government shud seriously consider lowering the taxes and excise duties on petroleum products. These taxes and duties constitute almost half the total cost of petrol/liter
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Old 8th June 2006, 16:57   #233
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Now I guess we should seriously consider options like Car Pooling etc...
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Old 8th June 2006, 17:59   #234
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very costly petrol disiel very costly petrol disiel very costly petrol disiel very costly petrol disiel
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Old 8th June 2006, 21:53   #235
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The point being missed here is that govt. need not reduce it's revenues; it can still decrease the taxes, if it WANTS to; for example, if 1 litre of petrol costs Rs.10, assume that the tax is 20%, and stands at Rs.2. Now say, the price of the fuel is increased to Rs.20. The common man ends up paying Rs.4 as tax. Why can't the tax be reduced to 10%, so that the revenue remains the same at Rs.2 per litre, and the actual fuel price can be dropped to Rs. 18 instead of 20. If the global prices are increasing, it doesn't mean that the effects should translate into higher taxes as well.

So you see, the govt. should reduce the taxes; their revenues won't be affected even if the taxes are reduced. To the common man, whatever reductions possible will be of noticeable significance. But hey, the petroleum industry is like the golden goose- why SHOULDN'T they milk the poor man...?

And hey, does anybody remember, that the govt. increased the prices of all the fuels by more than 10% during the Iraq war, as a "precautionary" measure, even when the global prices were stable...? No revisions took place after the war, and none till date...
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Old 8th June 2006, 22:50   #236
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Default Petrol and Diesel Price Breakup

Today in Hindustan Times, they have given the actual break up for the litre of petrol and diesel.( all figures from HT)

petrol diesel
sale price in delhi 47.50 32.46

Basic(crude,refining
and custom duty) 23.38 22.98

Surcharge(State
surcharge, nrf,
shunting charges,rpo etc) 00.21 00.18

Excise duty(basic,cess on
excise duty,add excise duty) 15.17 05.20

Sales Tax 07.74 03.54

dealer commision+
sales turnover tax 01.00 00.56

Internation retail Prices when compared with India.

U.S 34.48, Saudi Arabia 09.20, Japan 46.10, venezuela 01.21, U.K 69.46 and Kuwait 07.88.

I believe in International market Petrol and diesel retail the same price so only one figure.

Excise Duty and Sales tax are the major reason for the High Petrol and diesel prices.

take care

Last edited by horsepower : 8th June 2006 at 22:51.
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Old 8th June 2006, 23:29   #237
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go to the link below.it reads that the death of al qaeda leader zarqawi has led to a drop of 1.7% in crude oil prices .lets see if our govt. passes this on to the consumers.also it is expected tht the prices of oil will drop even further.


http://www.news.com.au/story/0,10117...-23109,00.html
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Old 9th June 2006, 02:06   #238
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Well, the fuel hike is saddening coz' its not just fuel but prices of other commodities too going up. Our Indian government is following one funda : Making all the luxuries items(cars etc) affordable and necessities(fuel etc) unaffordable. Whereas, in other countries its the opposite.

But logically, the fuel hike wont really hit us so much. I pay around 200 rs more than what i used to pay for a 50ltr full-tank.

X
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Old 9th June 2006, 19:21   #239
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Quote:
Originally Posted by veyron1
The point being missed here is that govt. need not reduce it's revenues; it can still decrease the taxes, if it WANTS to; for example, if 1 litre of petrol costs Rs.10, assume that the tax is 20%, and stands at Rs.2. Now say, the price of the fuel is increased to Rs.20. The common man ends up paying Rs.4 as tax. Why can't the tax be reduced to 10%, so that the revenue remains the same at Rs.2 per litre, and the actual fuel price can be dropped to Rs. 18 instead of 20. If the global prices are increasing, it doesn't mean that the effects should translate into higher taxes as well.

So you see, the govt. should reduce the taxes; their revenues won't be affected even if the taxes are reduced. To the common man, whatever reductions possible will be of noticeable significance. But hey, the petroleum industry is like the golden goose- why SHOULDN'T they milk the poor man...?
Please, when you say common man, dont just take into account people with cars. As I said in my previous post, in my view, cooking fuels are more important as these are used by more people, even the people who cannot afford cars. The fact is that LPG and kerosene prices also go up, so the govt has to put in more money to subsidise it. If the tax keeps on reducing as fuel prices go up, ultimately the govt will be spending more in subsidies than it earns through taxes.
I have just made a point with respect to fuels. In our country, for the govt to support 1 billion people is in no means an inexpensive task. Be it for the subsidies in other areas to the new programs for the people, the govt needs more money. So, lowering taxes is not a good idea.


Quote:
Originally Posted by sivadas
The worst part is that even if the international crude oil prices come down to $10 per barrel, the increased price would never come down
Quote:
Originally Posted by hellspawn
go to the link below.it reads that the death of al qaeda leader zarqawi has led to a drop of 1.7% in crude oil prices .lets see if our govt. passes this on to the consumers.also it is expected tht the prices of oil will drop even further.
Quote:
Originally Posted by veyron1
And hey, does anybody remember, that the govt. increased the prices of all the fuels by more than 10% during the Iraq war, as a "precautionary" measure, even when the global prices were stable...? No revisions took place after the war, and none till date...
Let us consider the current situation. The oil companies require atleast rs.10 approx for petrol hike to offset the losses. But only rs.3 increase approved by cabinet. So, how do they recover the losses? They dont fully recover in the short term. They get a relief when the price goes down. So, it is illogical to pass on the reduced world oil price to the customer.
===
Above all, I feel it is better to price a valuable item like petrol higher as people will be more responsible in using it.
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Old 9th June 2006, 21:10   #240
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Quote:
Originally Posted by mxx
Please, when you say common man, dont just take into account people with cars. As I said in my previous post, in my view, cooking fuels are more important as these are used by more people, even the people who cannot afford cars. The fact is that LPG and kerosene prices also go up, so the govt has to put in more money to subsidise it. If the tax keeps on reducing as fuel prices go up, ultimately the govt will be spending more in subsidies than it earns through taxes.
Arre, nahin yaar, when I said common man, I also meant people without cars. Agreed kerosene and LPG needs to be much more affordable, but at what cost? The LPG and kerosene being borught to us are transported in trucks, which use diesel. An increase in diesel prices mean that the transportation prices go up, which the companies can't show (since LPG/kerosene price cap is regulated) , which are accounted for as losses, that are claimed as refunds. Same case with petrol and diesel. These are transported by tankers too, which run on diesel. So you see, the rise in the costs of fuels are affecting all, not just those with cars.

Let me describe how the cycle is going. As the costs of the fuel increases, (mostly due to tax; global rate increases are acceptable, but we pay the HIGHEST taxes on most commodities anywhere in the world, taking into account rupee value and purchasing power in terms of per capita income; i.e, for example, in the U.S, one of the higher taxed countries, the highest rate of income tax is 35%. Ours is 40% (corporate figures, both). Their avg. per capita income is $1000. Ours is about $250.) the transportation costs go up. As the transportation costs go up, the prices and indexes of the commodities go up. Inflation rate increases. Eventually, the salaries of the people have to be increased to meet the living standards. And how do the companies make up? By charging their clients/customers more. The govt., in return, taxes them more. The value of rupee goes down. The prices start increasing again.

This is the SIMPLEST chain that can be shown to describe the vicious circle that is going on. Although this is the same everywhere, developing countries and developed countries take care not to affect the purchasing power of their currency, to a large extent.

I'm all pro-govt. and all that, but please, do not believe all the cockamimey crap that the govt. is feeding you. The petroleum industry and govt. corruption go hand in hand. Has anybody been reading the E.T carefully? Nobody explains HOW these companies arrive at their staggering loss figures. In one page, the losses are given, and in the very next page, a report on the profits of these companies are shown. What the hell...? It's not that I cannot comprehend their stats, it's just that when companies are giving unbelievably large sums as the losses that they're incurring on a YoY basis (which means that the losses that the petro companies are putting up, are the profit figures that they're losing, or the money they potentially SHOULD have made. They're not ACTUALLY losing any money; business sense, you see), you just can't help it.

Another thing, why should kerosene be subsidised generally for all? Why can't it be subsidised just for poor people? That way, at least a lot of the adulteration can be brought into check, and some weight of the subsidy bill could be lifted.

And another thing. Why allow the dollar rates to go high and let the rupee weaken by allowing mass inflows as FII? The govt should bar FII's and promote FDI's instead. More liquidity, stability, better value of rupee, and cheaper imports. Although exports will get more competition and become tougher, the fuel costs would reduce in effect, since crude is imported. And since selling locally would be more profitable, petro-companies would start selling their products here. And yeah, the stock markets and the F&O would get stabilised too.

So you see, all this bull about the absolute necessity to increase prices is all crap. The Mah. govt (Mr. Deshmukh) allowed to forego the state taxes on the price increase. A small step, but has resulted in a positive price reduction of a rupee for petrol, and 65 paise for diesel.

There are ways to work around the existing system. But nobody wants to go there. Nobody is looking at the bigger picture here. Everybody wants the easy way out. Saying the fuel price increase is justified is like supporting the govt.'s decision to increase SC/ST quota to 50% in proffessional courses. It's all bull.....

Of course, since I'm not working for the govt, and this is all a layman's view, I cannot state the intricacies, but what I'm suggesting here is that the current outlook should change. In net, the prices being increased are not good for us in the long term. That's it.
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