[civic-sense]

Originally Posted by samarjitdhar

The way you are making out the gargantuan amount of fuel the mercs/beems/audis/skodas are consuming they must be selling astronomically high numbers though its just not reflecting somehow on their balance sheets . Believe me dude, they would take that any day if that really happened.

I wonder why M&M is complaining to the government about this impending taxation of diesel vehicles though their most expensive one now doesn't cross 15 lakhs even. I would suggest that you stop drinking the koolaid the government dishes out and just crunch some numbers here on TBHP about the sales of the Boleros and the Sumos and how many do they sell every year. And most of them are going to the taxi segment providing transportation to the masses. No I am not talking of call cabs or taxis. I am talking of the overloaded ones that run in rural areas providing the lifeline to the rural masses. Now we dont have the numbers for the commercial trucks and buses and if you stack them up, I am not sure how can your argument about the massive diesel fuel consumption of the mercs/beems/audis/skodas when compared to them can hold up.

What is your argument? That the violators are small in number, so don't bother going after them? Don't come after me cos it is difficult for you to find me? Leave the operational stuff to the govt.

Big or small, if you can plug a hole, better plug it. The hole is only getting bigger day by day, as we see that diesel car sales are increasing.

[decode]

Originally Posted by govigov

Well said!

imagine the amount of revenue earned by the government in the name of fuel taxes, road taxes and sales taxes..

It may have been ok if the road conditions and the quality of fuel is at a higher standard.

I may be wrong, but i dont think the current refineries have the capacity/ability to distill ULSD(Ultra Low Sulphur Diesel)

I agree... If subsidy is withdrawn from diesel and the prices are hiked, would the government ever consider reducing the petrol prices? It is just that leeches in this corrupt setup who already get enough and greedy for more will only get more and the common people remain the same. It is fine if the taxes go in to the country's development and taxes from fuel should be used for "advanced" infrastructure so that our families and ourselves can travel /live safe and also our generations to come.

The upper advantage that adds fuel to the fire to this "system" of juicing the nation is also the attitude mentioned by - "Govigov" - don't mind my house is on fire, as long as I can get the other neighbor's houses on fire too, eh? Who cares about dousing the fire at all! . We have to focus on the source of the fire and douse it off togther and it will be easier and stronger that way.

We have to focus on what all of us can together do to try (force) best to make our roads / life safe for our nation.

[samarjitdhar]

Originally Posted by civic-sense

What is your argument? That the violators are small in number, so don't bother going after them? Don't come after me cos it is difficult for you to find me? Leave the operational stuff to the govt.

Big or small, if you can plug a hole, better plug it. The hole is only getting bigger day by day, as we see that diesel car sales are increasing.

My argument is that this entire argument about luxury vehicles consuming diesel creating a burden on the petrol using folks is a non sequitur to begin with. There is already a skewed taxation policy on both petrol and diesel which is widely known. If both these products are sold at the market price this discussion wouldn't have taken place. However the government has itself created this disparity while thinking that most Indians out of their patriotic sense of duty will opt for petrol vehicles even if it means selling their kidneys eventually. Oh but dont challenge the government as to why it doesnt improve its tax collection base or try anything to repatriate the crores of black money stored in foreign shores. So if tax paying citizens fed up with the government's inaction and corruption operates diesel vehicles legally for personal use they shouldn't be castigated for it. By the way of the 1 lakh bookings of the new Swift, 80% is diesel so the average joe car user have already called the government's bluff. So lets stop blaming the Audis/Mercs/Beems for bankrupting the government by selling diesel cars . If they sold even half of what the Swift diesel is selling, they will move their headquarters to India.

[souravc]

Originally Posted by civic-sense

While I used to believe that there is no subsidy for diesel, I recently came across diesel prices in Shell.

Diesel at shell - Rs 65
Petrol at PSU - Rs 73
Petrol at shell - Rs 75
Diesel at PSU - Rs 45

So it is not just taxes. Approximately Rs 18 is the subsidy given for diesel.

Now, if you want to treat diesel as less taxed, am fine with that argument, but who bleeds because of it are the rest of the tax payers. The rest of us are footing the bill for the cheap fuel for mercs/beems/audis/skodas etc. As simple as that.

Those are retail prices which includes taxes and levies that every retailer including Shell is subjected to . Please do not delude yourself by saying that you are subsidising diesel owners . Even the OMCs call it "under recovery" rather than subsidy

[ninjatalli]

Originally Posted by civic-sense

While I used to believe that there is no subsidy for diesel, I recently came across diesel prices in Shell.

Diesel at shell - Rs 65
Petrol at PSU - Rs 73
Petrol at shell - Rs 75
Diesel at PSU - Rs 45

So it is not just taxes. Approximately Rs 18 is the subsidy given for diesel.

Now, if you want to treat diesel as less taxed, am fine with that argument, but who bleeds because of it are the rest of the tax payers. The rest of us are footing the bill for the cheap fuel for mercs/beems/audis/skodas etc. As simple as that.

Please sir, is that your analysis/understanding for stating diesel fuel has a subsidy? No wonder there are so many people believing in this subsidy stuff.

We do not know what is the operation cost of Shell. We do not know where they do their sourcing. Most important, we do not know their pricing model, and the margins they set. On the outright we can't just compare Shell's & Indian Oil company prices and come to a conclusion.

Rather it is more vital to understand how the pricing is done to arrive at the particular price. By comparing the petrol & diesel prices of a single company, a lot of the external factors get ruled out as they (most of them) apply the same to both fuels.

And there are so many good analysis available on this forum itself, as well as online. For starters the excellent post by @antz.bin. And there are several more - please take that for your analysis and form your conclusions. If you have doubts on his motives, please do google it up online - you'll find a lot more.

Originally Posted by antz.bin

Recently, Petrol pricing has been a topic of discussion since another Petrol price hike has been announced by the govt. of India. Since all the members here are affected by these continuous price hikes, I tried to go a bit in depth trying to understand the economics of Fuel pricing and how the government is looting the common man under the pretext of fuel subsidies.

This is a complex matter to understand at first. But as soon as the numbers start flowing in, we will understand the extent to which the government has fallen in order to rob the public under the pretext of 'welfare of the poorest'.

Starting from the basics. We must understand where all this Petrol comes from, How it is produced and distributed.
...

And no sir, you are not footing the bill for my travels. You and me and so many more are being robbed every time we take that vehicle out so that A Raja and many others more can fleece the country and we still keep paying. None of the oil companies are losing cash. That is the bottom-line. We have and are a funding source for the government which keeps thinking it is like an unlimited source.

Damn! Budget deficit going up? Ok, get some more taxes of those petrol fellas. Oh yea, don't worry, we can keep increasing the taxes. If they start cribbing, we'll reduce it by a rupee or two for a few months and then increase it again. And while you are on it, get those diesel buggers too will ya? Hey, just the public users, not the truckers and industries, ok! We need them, the elections are coming up!

The fact is the diesel vehicles have never had the same tax structure because the government till now had a perfect model to distinguish the tax payers and the vote banks/lobbies. Till a decade back, none of us would wish to buy a diesel car. Not anymore.

Stop believing in that "fact" of yours.

[civic-sense]

Originally Posted by souravc

Those are retail prices which includes taxes and levies that every retailer including Shell is subjected to . Please do not delude yourself by saying that you are subsidising diesel owners . Even the OMCs call it "under recovery" rather than subsidy

Originally Posted by ninjatalli

Please sir, is that your analysis/understanding for stating diesel fuel has a subsidy? No wonder there are so many people believing in this subsidy stuff.

The very fact that the price difference between PSU and shell for diesel is different from petrol is ample proof that there is a subsidy. Taxes remain the same for PSUs and private players. Now, even if it is not a subsidy and just a "under-recovery", then it is an "under-recovery" of taxes, which the govt has to recover from somewhere else, as expenditures remain the same. Govt does that by taxing some other sectors more (petrol, in this case) or by printing money. The former is a direct burden on the petrol users, while the latter is a burden on the whole country. Tell me, why should the country shoulder the burden of diesel cars? yes, the number is not huge, but it is steadily increasing.

And no sir, you are not footing the bill for my travels. You and me and so many more are being robbed every time we take that vehicle out so that A Raja and many others more can fleece the country and we still keep paying. None of the oil companies are losing cash. That is the bottom-line. We have and are a funding source for the government which keeps thinking it is like an unlimited source.

Damn! Budget deficit going up? Ok, get some more taxes of those petrol fellas. Oh yea, don't worry, we can keep increasing the taxes. If they start cribbing, we'll reduce it by a rupee or two for a few months and then increase it again. And while you are on it, get those diesel buggers too will ya? Hey, just the public users, not the truckers and industries, ok! We need them, the elections are coming up!

The fact is the diesel vehicles have never had the same tax structure because the government till now had a perfect model to distinguish the tax payers and the vote banks/lobbies. Till a decade back, none of us would wish to buy a diesel car. Not anymore.

Stop believing in that "fact" of yours.

While you are at it, please read that whole thread. if I remember correctly, the original poster had later admitted that his analysis was wrong.

Yeah, we are being cheated by the politicians. But that gives us no legitimacy to cheat. Everybody wants world class infrastructure, govt schemes etc, but when it comes to paying taxes, we cheat. One way or the other. This love for diesel is nothing else.

[ninjatalli]

Originally Posted by civic-sense

The very fact that the price difference between PSU and shell for diesel is different from petrol is ample proof that there is a subsidy. Taxes remain the same for PSUs and private players. Now, even if it is not a subsidy and just a "under-recovery", then it is an "under-recovery" of taxes, which the govt has to recover from somewhere else, as expenditures remain the same. Govt does that by taxing some other sectors more (petrol, in this case) or by printing money. The former is a direct burden on the petrol users, while the latter is a burden on the whole country. Tell me, why should the country shoulder the burden of diesel cars? yes, the number is not huge, but it is steadily increasing.

While you are at it, please read that whole thread. if I remember correctly, the original poster had later admitted that his analysis was wrong.

Yeah, we are being cheated by the politicians. But that gives us no legitimacy to cheat. Everybody wants world class infrastructure, govt schemes etc, but when it comes to paying taxes, we cheat. One way or the other. This love for diesel is nothing else.

I did. I am aware of the fallacies in his analysis. While they do exist, they still are a far better analysis than comparing shell's prices and concluding that there is a 18Rs subsidy. You might come up with better examples, but I get the drift.

As for the PSU - Shell comparison, you still aren't getting the point.

The point I was trying to make to you is that you are being unjustly taxed, while you seem to consider it a necessity. Kudos to the government for making you believe in it. Please remember this - the taxes on the fuel are a percentage. So even if the actual crude price increases, the price of the de-regulated price should go up. But the taxes shouldn't. But they do. But I guess that doesn't matter to you now.

[Ricci]

@Civic sense :
In Europe, prices vary a lot which is again due to taxes. In the UK , petrol is around Rs 80/litre, while Sweden and some other countries have it closer to Rs 100. Diesel/petrol prices in US too have some tax component, but way lower, they are priced around 46-48 per litre and only a tiny difference between them. Won't bring up Iran and Venezuela where prices are real cheap !

If we take only crude import + refining + storage + distribution/transport costs, both petrol and diesel work out to Rs 45 or less based on the US free market pricing. Since the PSUs were started with the intention of public service than profit making, I deem it necessary to point out that then they should sell diesel and petrol at or slightly above cost price , it is the government that muddies the water with taxation. To date, no one has given a clear pricing mechanism and net cost at the pump without the tax component, but various researchers have indicated at much as 53% of the petrol price we pay is tax from central and state governments.

[souravc]

Originally Posted by civic-sense

The very fact that the price difference between PSU and shell for diesel is different from petrol is ample proof that there is a subsidy. Taxes remain the same for PSUs and private players. Now, even if it is not a subsidy and just a "under-recovery", then it is an "under-recovery" of taxes, which the govt has to recover from somewhere else, as expenditures remain the same. Govt does that by taxing some other sectors more (petrol, in this case) or by printing money. The former is a direct burden on the petrol users, while the latter is a burden on the whole country. Tell me, why should the country shoulder the burden of diesel cars? yes, the number is not huge, but it is steadily increasing.

While you are at it, please read that whole thread. if I remember correctly, the original poster had later admitted that his analysis was wrong.

Yeah, we are being cheated by the politicians. But that gives us no legitimacy to cheat. Everybody wants world class infrastructure, govt schemes etc, but when it comes to paying taxes, we cheat. One way or the other. This love for diesel is nothing else.

You can belabour on your arguement as much as you want but your flawed arguements really does not make any case for proving that petrol owners are subsidising diesel vehicles . Maybe you can start off by analysing the cost of producing diesel , read up about the subsidy mechanism before drawing your far fetched conclusions . Your accusing diesel car owner of being cheats is really the pits !! Get some sense before dishing out garbage !
Else if we continue to stretch our imagination, i would not be surprised if people of NCR start accusing you that they have subsidised your Civic too given the tax sops extended by NCR towards establishing their factory. Going by your logic tax lost is subsidy, isn't it ?

[Aroy]

Originally Posted by civic-sense

The very fact that the price difference between PSU and shell for diesel is different from petrol is ample proof that there is a subsidy. Taxes remain the same for PSUs and private players. Now, even if it is not a subsidy and just a "under-recovery", then it is an "under-recovery" of taxes, which the govt has to recover from somewhere else, as expenditures remain the same. Govt does that by taxing some other sectors more (petrol, in this case) or by printing money. The former is a direct burden on the petrol users, while the latter is a burden on the whole country. Tell me, why should the country shoulder the burden of diesel cars? yes, the number is not huge, but it is steadily increasing.

I would desist from inferring anything based on the price differential between Public and Private Sector offerings. I also would not bet on taxes being equal, as there are a lot of incentives given to Public Sector companies, not available to Private Sector.

The retail prices have little bearing on the actual costs and taxes. They are based on "What the Market Can Bear" philosophy. In an ideal world Shell would have Zero sales if its prices were more than say Indian Oil, but they are surviving even though they have higher prices, that I would say is their marketing acumen!

As others have commented, the diesel "Subsidy" is notional, in the sense that less tax is collected than on Petrol, in no case is diesel sold at a loss to the companies.

"souravc" I think that we should desist from calling names. A dignified response is to refute the arguments in a "Gentle Man" like manner.

[sahakar]

Wow this thread is getting real hot and angry

There's no way this govt is going to rationalize diesel prices. The best it will do is increase a token 5 rupees or so.

Now, if the government is subsidizing diesel there is no reason why anybody be it the rich or the poor will not take advantage of it. Its simple logic that you would prefer to save your money and take advantage. No shame in that and especially for all those who are paying full income taxes.

Petrol car owners are bound to feel aggrieved. I sail both boats, have a petrol and a diesel. And after buying a diesel I realize what a fool I was burning all my hard earned money on petrol. Now even I am benefiting out of this socialist corrupt and subsidy crazy government of ours and am happy about it. Finally taking something back from the government.

Cheers

[shankar.balan]

Perhaps some proper statistics on the actual population in each income bracket can tell us who really is taking advantage of less expensive subsidized diesel. Since agriculture is not taxed, there are lots of chaps taking cover under being agriculturists, but who, in reality are plutocrats and big businessmen. Frankly I don't think even this Aadhar is going to help matters much in terms of providing proper information.
Then we are told that only 0.6% of Diesel consumed in this country is for Private use.
I would imagine that it is only a tiny percentage of this 0.6% that is finding its way into the tanks of the big German luxury vehicles or am I missing something here?

[dingolphie]

Originally Posted by Aroy

"souravc" I think that we should desist from calling names. A dignified response is to refute the arguments in a "Gentle Man" like manner.

A bit OT, mods please delete if required - but I'm not sure why you feel souravc has done any name calling, unless I've missed something. Strong words, yes, but justified I felt and within the bounds of decency, given that as a diesel car owner, he (me too) was called a cheat, which for me was pretty out of line and I'd say sourav beat me to the response. Its one thing to say the govt has to find a way to ensure that the diesel subsidy is not extended to pvt car owners, but quite another to say that because diesel is subsidised all diesel car owners are cheats.

On people buying diesel cars more than petrol, this is not just in India. Take the case of Britain where now more diesel cars are sold than petrol and its a place where diesel costs more than petrol. This is happening all over Europe where diesel is overtaking petrol. An argument that car buyers should choose petrol because diesel is subsidised, or else you are cheating does not hold water.
A mechanism to ensure that the subsidy does not extend to private use is required and the pros/cons of additional excise duty/price rationalization/ deregulation of petrol/diesel are being debated.

Diesel overtakes petrol

It is the more efficient and marginally cleaner fuel - easier to meet emission norms. I owned a petrol car in the UK and now own a diesel car here. If diesel costs as much as petrol, there's still no guarantee that I'd buy a petrol car. In fact, I'd still buy the diesel Vento over the city or any other petrol.

[vishnurp99]

@civicsense I was in the same boat as you sometime back. We had 2 petrol cars in the family a palio and a santro and there was a lot of jealousy/heartburn seeing the diesel owners enjoying the cheaper fuel. Now we have 3 cars a fiesta tdci(3 years old) and figo tdci(1 year old) and the santro(5 years) is still with us. THe diesel cars are close to 40K in running with the santro still at around 45K after 5 years.Suggest that you should go ahead and do the same.

You don't have any business to call people cheats just because they use diesel cars.They are paying the govt rate for diesel including tax and all.

On a similar note i can call you a fool because you drive a petrol car . After all you pay more for a fuel when there is a cheaper more fuel effecient fuel available.

[sgiitk]

I think the basic point is missed. What Parikh says is effectively, since Diesel cannot be taxed as must as petrol, to tax the Diesel vehicles in the non-targeted segment (for low cost fuel) up front. Luxury or otherwise is not in the picture. This will level the playing field somewhat. What will happen is that the cost-benefit changeover point will shift to, say. 40,000kpa.