Team-BHP - Tax on second car purchase

I came across this news article on the online news portal for Decan Chronicle

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Tax to put brakes on second car purchase

Hyderabad, Aug. 15: The State government is planning to increase vehicle life tax on those who buy a second car to curb the rapid increase in the number of four wheelers in the city. Already, the State is charging nine per cent life tax on personal cars, which is the highest in the country. This is likely to be increased to 11 per cent if a second car is purchased.
Traffic authorities are perturbed by the increase in number of cars in the city. Around 120 new cars are registered every day. The State Transport Authority had come up with the idea of increasing life tax, as there is no provision under the Central Motor Vehicle Act to put a cap on the registration of new cars.

“We want to make it a costly proposition,” said an STA official. “Some households in the city have more cars than members.” Traffic authorities are already facing big problems because of lack of parking space in the city and further increase in the number of cars will only compound their worries. Cars are parked all along roads in posh residential areas such as Jubilee Hills, Banjara Hills, Ameerpet, S.R. Nagar and Bowenpally, causing traffic snarls.

“Only if all departments resolve to act together can we change the situation,” said additional deputy commissioner of police (traffic) G. Sampath Kumar Reddy. The road network has not expanded much and in the last few decades. Since 1960, only the Necklace Road has been constructed in the city. Though roads have been widened, they are unable to cope with the burgeoning traffic problem.

There are about 3 lakh cars registered in the city. The increase in the number of cars began since 2005-06 and is likely to reach its peak this year. In 2005-06, 23,000 new cars were registered and the number rose to 28,000 in 2006-07.

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Do you think this will be an effective method to cut down on vehicular numbers? While I understand the logic behind it, I really do not think it will achieve the objective, as I think most of the new cars registration are for first timers. But atleast the Andhra government is begining to realise the dangers of overclogged vehicular traffic. I would hate to see Hyderabad get traffic woes as Bangalore gets!

This is simply insane. This is like saying that anybody who cannot afford the tax should not travel. Of course, the public transport (limited to buses) are available, but I guess people have to hang from the real ladder of the bus to reach anywhere. At least, that is what I have seen in AP, (and many states, including Kerala), Even while travelling on train, you can see overcrowded, over loaded buses trying to catch up with the train.
Has the govt. done anything to increase the public transport available? Need for transport has increased exponentially - not just the increase in population, it is also the increase in commuting.
In Cochin, while the number of buses have remained static for past 15 years, the passenger capacity, measured in number of seats has come down, because the existing 43 seater buses are being replaced by mini buses. But the population has grown, new roads have come up, existing roads have improved, bridges and flyovers have been constructed, throwing open new corridors of transport, but the routes have simply remained static.
I nowadays find that travelling with a family on a car is less expensive than taking public transport. By the time I reach from my residence to the bus stop, I can reach my destination if I use the car.
I know that this is not the place for discussing public transport, but I am a new convert from public transport, and stil continue to use buses for a large part of my solo commuting, and lopsided policy of the government is getting on my nerves.

Here is a crazy idea:-
I own a car.
New car is in my wife's name.
I and wife form a LImited liability company (not a partnership).
The third car is in name of the company.
Me and wife float 4 other limited liability company (Pvt. Ltd co).
Me + wife + first company + 4 other company = 7 persons. Together, they form a public limited company. A fourth car is owned by the public limited co. (Cars for the other 4 pvt. limited companies is optional).
What will the law do?

Hmmm... actually this piece of news appeared in TOI Hyderabad edition quite sometime back. They are studying a lot many models to overcome the growing car problems. One is to allow odd and even number of cars on the roads on alternate days. Another is to charge a congestion surcharge ala airlines but on an annual basis. Yet another is this increased tax on the second car. The third is to put a 10% surcharge on the lifetax of the second car. Nothing is fixed as yet though.

Quote:

Originally Posted by esteem_lover (Post 534683)

I'd say it is a wonderful start to what could be a part of the real answer to our over crowded city traffic. I know i will be crucified, but still I love this initiative. :)

I beg to differ. Increasing tax on vehicles should be the last resort after the government has exhausted every other option. The ideal solution would have been to widen existing roads/build new roads, build an effective public transport/metro, make driving classes mandatory, enforce traffic laws, increase parking space and finally when the nothing works raise the taxes. But in India our babu's tend to take the easiest route first.

Quote:

Originally Posted by Mayavi (Post 534759)

But in India our babu's tend to take the easiest route first.

The same babus have done reasonably well in the last 60 years, even if they didn't, it has happened. Increasing the tax on the 2nd vehicle is not such a bad thing when you know the living/driving conditions here. Moreover, the tax will still be only marginally higher than bangalore. talk about inequality. :p

So let us start to trust ourselves first before we start suggesting things of which we have no idea. :)

Quote:

Originally Posted by DriverR (Post 534479)

Hyderabad, Aug. 15: The State government is planning to increase vehicle life tax on those who buy a second car to curb the rapid increase in the number of four wheelers in the city. Already, the State is charging nine per cent life tax on personal cars, which is the highest in the country. This is likely to be increased to 11 per cent if a second car is purchased.

Last time I checked Karnataka and Andhra were in the same country. The LTT rate in Karnataka is 9-10-12 for <5L, >5L and >10L cars. New Page 1

Quote:

Originally Posted by BaCkSeAtDrIVeR (Post 534647)

It is indeed a crazy idea. The moment you form the private limited company, you will be mobbed by Labour, IT, PF and other applicable government departments. You would hire a accountant just to keep track of all the documentation, and maintenance of all the various ledgers. The cost of this tax saving scheme will turn out so high, after some time you will gladly accept even a 50% hike in LTT, it is cheaper than maintaining a Private limited company. Let's not even talk about publc limited company.

Quote:

Originally Posted by esteem_lover (Post 534683)

I'd say it is a wonderful start to what could be a part of the real answer to our over crowded city traffic. I know i will be crucified, but still I love this initiative. :)

You mean people who can afford second car will be detered by a slight increase in LTT?

It is indeed a big problem. However the solution should be such that people should not feel the need for owning more cars. (Infact not owning any car at all). By this move, only higher taxes can be generated, but that wont stop any potential second car buyer.

In Bengal there was a trend upto quite some back of not owning any car. Car was seen as a liability rather than a convenience. The reason was that Transport facilities at that time could meet the demands of the day. But with the current scenario it fails. Apart from convenient mode of transport. The shorted commute from my home to office takes 1hr 20 minutes, the same distance takes 35 mins by car. My Dad's office is on a completely different route. So is that of my wife.

Its only my Wife's office that has a convenient public transport commute. Dad gets office car. Now had the last two equations been any different, we would need 3 cars.

Quote:

Originally Posted by esteem_lover (Post 534832)

I like the singapore way where the public transport is so much better & affordable than the private transport.

Lol, so when are we going to see our efficient and affordable public transport? The collected tax will go to fund another harebrained scheme like NREGS or one of the myriad Indira/Rajiv yojana's that drain the government coffers.

If the idea is to prevent congestion of streets, the first step any sane government would take is to build an effective public transport. Do that and half the vehicles on the streets would disappear. Let those who want to buy two cars buy them. It will only add to the economy.

Quote:

Originally Posted by esteem_lover (Post 534777)

The same babus have done reasonably well in the last 60 years, even if they didn't, it has happened.

I have seen 22 of those 60 years and I hold a different opinion, but then I come from a middle class.