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Old 20th January 2016, 16:56   #5251
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Default Re: The Official Fuel Prices Thread

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Originally Posted by Chetan_Rao View Post
Get everyone (or as many as possible) to pay some taxes, then bother about how much is fair. We need to stop being regressive first, worrying about being progressive is a future step.
As of now, taxing only 3% of the population via income tax is grossly unfair than any other suggested alternatives.
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Old 20th January 2016, 17:01   #5252
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Default Re: The Official Fuel Prices Thread

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Originally Posted by 1lokesh View Post
The thing is that only 3% of the population pays income tax. Which is the biggest bias. Consumption based tax will be a big boost to remove such bias.

Also, the money not spent (in case of rich) is sitting duck if they achieve the impossible, i.e.. tax each and every transaction. Highly doubt this scenario though.
There are 2 fallacies here:

- if you impose consumption based tax, the burden of tax will shift from the richer towards the poorer section of society. So, please tell me that you are OK for a greater tax burden shifting towards school teachers, peons, nurses, police constables, drivers, etc. (who are below the minimum taxable bracket), and a lesser burden on HNIs and privileged classes. If that is the case, consumption based tax is the right solution. With such a vast proportion of our population being under-privileged, I think there is no way we can afford that.

- avoidance of tax is a different topic entirely. Avoidance is rampant irrespective of whether it is direct or indirect taxation. I am sure the compliance of service tax is as low if not lower than income tax. Plumbers, carpenters, mechanics, agents...how many of these guys are actually complying with service tax? Same with VAT. You can buy your furniture in a showroom and he will tell you price X if you ask for a bill price X - 10% if you do not ask for a bill. Most individual buyers are today buying without bill and avoiding tax.

I feel equally bad being a salaried tax payer when so many others are avoiding and getting away with it. Despite this, I am not sure that consumption based taxation is the answer. Enforcement has to be stepped up drastically.
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Old 20th January 2016, 17:09   #5253
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Default Re: The Official Fuel Prices Thread

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Originally Posted by Chetan_Rao View Post
In a country where only ~3% pay taxes, our first priority should be to think about widening the tax-payer base, and consumption-based tax is the obvious way to go. Once we hit an acceptable level w.r.t. user base (may take a generation TBH), rationalization would be the next step.
We already have a lot of indirect tax collection. Indirect tax collection is near 6 times direct tax collection. We collect around 600000 crores in indirect taxes. It's a fallacy to say that only 3% pay taxes. This is true in more than 1 way. First is that the stat is actually that only 3% file returns. Actual direct tax payers may be more (TDS). And most people pay indirect taxes already.

Last edited by carboy : 20th January 2016 at 17:28.
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Old 20th January 2016, 17:22   #5254
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Default Re: The Official Fuel Prices Thread

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Originally Posted by carboy View Post
We already have a lot of indirect tax collection. Indirect tax collection is near 6 times direct tax collect. We collect around 600000 crores in indirect taxes. It's a fallacy to say that only 3% pay taxes. This is true in more than 1 way. First is that the stat is actually that only 3% file returns. Actual direct tax payers may be more (TDS). And most people pay indirect taxes already.
This is getting off-topic, I guess we should move this discussion to a taxation thread.

That number may be false on more than one count (either way), not everyone who files returns reports actual income honestly either.

Again, I don't disagree that there are no simple solutions to our taxation problem and consumption-based taxation can only be a transitional step to a more inclusive & progressive system, but our current situation is unsustainable. Collections aren't enough, and even the meager collections aren't utilized effectively.

If there are better options available, I'd be more than glad to be enlightened. I'm certainly no economist or taxation guru.

Last edited by Chetan_Rao : 20th January 2016 at 17:24.
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Old 20th January 2016, 18:02   #5255
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Default Re: The Official Fuel Prices Thread

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Originally Posted by reverse_gear View Post
There are 2 fallacies here:

- if you impose consumption based tax, the burden of tax will shift from the richer towards the poorer section of society. So, please tell me that you are OK for a greater tax burden shifting towards school teachers, peons, nurses, police constables, drivers, etc. (who are below the minimum taxable bracket), and a lesser burden on HNIs and privileged classes. If that is the case, consumption based tax is the right solution. With such a vast proportion of our population being under-privileged, I think there is no way we can afford that.

- avoidance of tax is a different topic entirely. Avoidance is rampant irrespective of whether it is direct or indirect taxation. I am sure the compliance of service tax is as low if not lower than income tax. Plumbers, carpenters, mechanics, agents...how many of these guys are actually complying with service tax? Same with VAT. You can buy your furniture in a showroom and he will tell you price X if you ask for a bill price X - 10% if you do not ask for a bill. Most individual buyers are today buying without bill and avoiding tax.

I feel equally bad being a salaried tax payer when so many others are avoiding and getting away with it. Despite this, I am not sure that consumption based taxation is the answer. Enforcement has to be stepped up drastically.
What my view is that a richer person spends more than the one who is comparatively less rich. Take the example of a common man, with an annual salary of INR 10L PA. He is going to choose a Wagon R or a probably a Celerio, whereas a person earning INR 50L PA is going to choose an XUV500 or a Creta. The point I'm trying to make is the kind of money one spends is according to what he/she earns and the (transaction) tax will impact accordingly.

I am certainly an advocate for higher taxes on the guy buying an SUV rather than someone buying a Wagon R or Celerio. Nothing wrong in that, right?

Same principle that applies to someone buying groceries at Big Bazaar vs someone buying at Godrej Nature's Basket or Hypercity.


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Originally Posted by Chetan_Rao View Post
This is getting off-topic, I guess we should move this discussion to a taxation thread.
I agree. No more posts from me on this matter atleast in this thread.

Last edited by 1lokesh : 20th January 2016 at 18:04.
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Old 20th January 2016, 18:24   #5256
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Default Re: The Official Fuel Prices Thread

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Originally Posted by sathya_g_m View Post
Though I see people ranting on the tax hikes. In a country where number of Income Tax payers are less, this move will make sure that every body who uses fuel pay their own share of tax. Hopefully, if this move results in reduction in income tax (or increase the tax slab) this would be a perfect deal.
VAT is a state subject so has no effect on the income tax. Remember 42% of the increase in excise is also going to the states. I did hear from somebody that Bihar too has hiked VAT on fuels!! The media was more interested in VAT on samosas'!
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Old 20th January 2016, 18:30   #5257
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Default Re: The Official Fuel Prices Thread

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Originally Posted by 1lokesh View Post
What my view is that a richer person spends more than the one who is comparatively less rich.
As an absolute value, true. As a percentage, no.

As per my earlier example(http://www.team-bhp.com/forum/indian...ml#post3894705 (The Official Fuel Prices Thread)), if there is no Income tax and a 30% indirect tax on all stuff, then a person earning 5000 per month will be paying 30% of income as total tax. A person earning 5,00,000 per month will be paying 15% of his income as total tax. And Virat Kohli will be paying 3% of his income as total tax.
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Old 20th January 2016, 18:50   #5258
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Originally Posted by sgiitk View Post
VAT is a state subject so has no effect on the income tax. Remember 42% of the increase in excise is also going to the states.
Isn't it the same case for IT as well? All the gaps that are getting filled in fuel are excise taxes. States havent caught up in the act yet :-)
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Old 20th January 2016, 21:04   #5259
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Default Re: The Official Fuel Prices Thread

Very taxing issue, but lets leave this debate on direct taxes versus indirect taxed for a bit. The fact is that The Government of India claimed to have deregulated petrol prices on 25th June 2010 and Diesel in Oct 2014. See link below: http://indianexpress.com/article/bus...-3-37-a-litre/

At that time, Jaitley said that fuel prices would now follow international crude prices. I don't see that happening, so I think he lied. When the international price of crude went up, we paid more, when its down, we're not paying much less. That does not sound like deregulation to me.
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Old 20th January 2016, 21:52   #5260
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Default Re: The Official Fuel Prices Thread

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Originally Posted by sgiitk View Post
VAT is a state subject so has no effect on the income tax. Remember 42% of the increase in excise is also going to the states. I did hear from somebody that Bihar too has hiked VAT on fuels!! The media was more interested in VAT on samosas'!
So center is hiking excise to help States. That excuse can be a good one for use by the government. What about balance 58%? VAT hike is not hurting us as much as continuous excise hike.
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Old 21st January 2016, 05:37   #5261
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Default Re: The Official Fuel Prices Thread

Excise hike doesn't seems to be enough for the government now they are planning an extra Cess on petrol, diesel & telecom service to fund Swachh Bharat initiatives.
Economic times

http://economictimes.indiatimes.com/...w/50661339.cms
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Old 21st January 2016, 06:43   #5262
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Default Re: The Official Fuel Prices Thread

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Excise hike doesn't seems to be enough for the government now they are planning an extra Cess on petrol, diesel & telecom service to fund Swachh Bharat initiatives.
Probably so that the MPs/ministers can clock up even more than the 900+ km/day on their luxury SUVs that is being reported now - to tend to their constituencies!
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Old 21st January 2016, 10:03   #5263
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Default Re: The Official Fuel Prices Thread

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Originally Posted by Lalvaz View Post
At that time, Jaitley said that fuel prices would now follow international crude prices. I don't see that happening, so I think he lied. When the international price of crude went up, we paid more, when its down, we're not paying much less. That does not sound like deregulation to me.
I think what the OMCs are doing is not to compute the cost but actually taking the International price of the fuels (where do they get BS-III/IV only I will not comment on, I thought the world was on Euro-V and beyond.
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So center is hiking excise to help States. That excuse can be a good one for use by the government. What about balance 58%? VAT hike is not hurting us as much as continuous excise hike.
What would have happened even earlier is a hike in VAT to milk the consumer. In fact when the hikes in Excise started they said as much. See many (if not most) states have gone from an ad valoreum VAT to a 'floor VAT' ,and then hiking makes no sense, since their revenues were not being affected. I have a feeling in Delhi they were losing VAT revenues since a lot of Trucks were bypassing Delhi, and the odd-even (and car pooling) led to a drop in fuel sales as well. Now accepting these will not be in character.
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Old 21st January 2016, 10:45   #5264
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Default Re: The Official Fuel Prices Thread

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I have a feeling in Delhi they were losing VAT revenues since a lot of Trucks were bypassing Delhi, and the odd-even (and car pooling) led to a drop in fuel sales as well. Now accepting these will not be in character.
I agree that Delhi's hiking VAT to make it equal to Haryana is pure example of greed. But at the same time isn't Haryana Government being greedy for ages as the fuel prices are always more than Delhi. To add, they do not even have 'pea brained' schemes or any scheme as such except for giving away forest land to Developers for obvious reasons.
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Old 21st January 2016, 12:12   #5265
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Default Re: The Official Fuel Prices Thread

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I agree that Delhi's hiking VAT to make it equal to Haryana is pure example of greed. But at the same time isn't Haryana Government being greedy for ages as the fuel prices are always more than Delhi.
My son lived in Haryana and works in Delhi. When the difference was marginal, then he preferred buying Petrol in Gurgaon, then when it crossed ₹2 he started buying in Delhi (MG Road), now he may consider switching back. In any case when looking at Delhi (the most subsidized city in India), and Haryana fuel prices in UP look to be a loot.

I will not take up the developers issue since it is political.
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