[freedom]

Originally Posted by naveenroy

Hahaha, I may be severely OT here but it is hilarious that people who cursed the previous government for the high oil prices (even when prices were high on the world market) are now supporting the high prices now. I mean, is there a logic to this?

Well, we would all like low oil prices. But its one thing to curse when prices are high and the govt keeps raking in the moolah (%age of price). That was excatly what the previous regime was going. Tax .. tax and more tax. I was actually expecting that some FM will put Fringe Benefit Tax on petrol and then give that money to some shady social program.

This time, the prices are actually low and the govt is not passing it on. Atleast I am not paying extra from my pocket. I also like that fact that LPG subsidies is being heavily discouraged.

All I am hoping for now is taxes on diesel to be on par with Petrol, then we will know if car buyers really like driving diesel or do they buy it just b'ca its cheaper to run.

[sgiitk]

Originally Posted by sgiitk

I saw people on another forum, since they fell states may hike VAT to pay for birthdays, havans, or chadors. They feel the centre may put it to better use.

Delhi has hiked VAT, to pay for the next hare brained scheme? I think they saw that petrol was about ₹2 costlier in neighboring Haryana so got greedy.

[carboy]

How opinions change on tax increase on fuel depending on who is doing the tax increase :-)

[sathya_g_m]

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.
With too many vehicles on the road, low fuel prices are just a simple recipe for reckless usage and increased pollution.

[freedom]

Originally Posted by sathya_g_m

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.
With too many vehicles on the road, low fuel prices are just a simple recipe for reckless usage and increased pollution.

Exactly what I tried to impress upon the members a few days back.
80/l 2 years back sounded very costly. 65/l in todays times is no pinch at all.

Any chance of rick/cab fare coming down with lower fuel prices? Nope.

[carboy]

Originally Posted by sathya_g_m

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.

Why just for fuel? Why not increase taxes then on a lot of stuff - increase taxes on cars, increase taxes on tyres, increase taxes on car stereo, increase taxes on all car spare parts, increase taxes on engine oil.

And why stop at cars? Since income tax payers are less, why not increase taxes even more on 40"+TVs, air conditioners, computers, all mobile phones costing above 10K?

Originally Posted by freedom

Any chance of rick/cab fare coming down with lower fuel prices? Nope.

Most of them run on diesel/cng. And a cab company I use regularly reduced prices when diesel prices came down.

[Chetan_Rao]

The solution to increase tax revenue in a country with low single digit tax-payer coverage is moving away from income-based taxation to consumption-based taxation across the board, not arbitrarily taxing commodities that get the meekest protests.

I don't mind paying extra on my purchases, but as a citizen it's my right to know what's being done with that money. Too much to ask in India?

[sourabhzen]

Why is Center Government continuously increasing excise? I think the basic fuel price is the result of center's greed and they know car owners do not count in their vote bank politics.

[carboy]

Originally Posted by Chetan_Rao

The solution to increase tax revenue in a country with low single digit tax-payer coverage is moving away from income-based taxation to consumption-based taxation across the board, not arbitrarily taxing commodities that get the meekest protests.

I don't mind paying extra on my purchases, but as a citizen it's my right to know what's being done with that money. Too much to ask in India?

The thing about consumption based taxation/indirect taxation is that it is not progressive.

If I earn 5000 rupees a month, I will be pretty much be spending 100% of my income every month. So I am taxed on all my income.

If I earn 5 lakh rupees a month, i may just be spending 50% of my income every month. So I am taxed on only 50% of my income.

If I am Virat Kohli, I may only be spending only 20% of my income. So I am taxed on only 20% of my income.

So the richer you are, the lesser the percentage of your income which is taxed. Whether this is a good thing or bad is debatable.

[1lokesh]

Originally Posted by carboy

The thing about consumption based taxation/indirect taxation is that it is not progressive.

If I earn 5000 rupees a month, I will be pretty much be spending 100% of my income every month. So I am taxed on all my income.

If I earn 5 lakh rupees a month, i may just be spending 50% of my income every month. So I am taxed on only 50% of my income.

If I am Virat Kohli, I may only be spending only 20% of my income. So I am taxed on only 20% of my income.

So the richer you are, the lesser the percentage of your income which is taxed. Whether this is a good thing or bad is debatable.

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.

[sathya_g_m]

Originally Posted by carboy

And why stop at cars? Since income tax payers are less, why not increase taxes even more on 40"+TVs, air conditioners, computers, all mobile phones costing above 10K?

Agreed! That should be the way to move. However, our governments doesnt have guts to increase tax if it directly increases the prices, unless they are left with no other option. I am sure they wouldnt have increased the excise duty on fuel if the crude price remained high/stable, they just cashed in on the price drop to fill their coffers.

I hope this extra money they make will make them give more relief to income tax payers (atleast the salaried class) in coming budget. I am waiting to see if it is going to be a day dream or day light robbery.

[carboy]

Originally Posted by 1lokesh

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.

What do you mean by tax each and every transaction?

[1lokesh]

Originally Posted by carboy

What do you mean by tax each and every transaction?

Like everything that is paid is on record and has receipt. And all of them are taxed. from your maid to petrol purchase. I know its something very very difficult, but not really impossible to achieve.

[carboy]

Originally Posted by 1lokesh

Like everything that is paid is on record and has receipt. And all of them are taxed. from your maid to petrol purchase. I know its something very very difficult, but not really impossible to achieve.

How will you achieve it? If it were possible to achieve it, then there wouldn't be so much black money. And taxing every transaction will make sure there is more and more undocumented transactions.

[Chetan_Rao]

Originally Posted by carboy

The thing about consumption based taxation/indirect taxation is that it is not progressive......

I don't disagree with the argument per se, but India's taxation scenario is too immature to bother about stuff like that right now.

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.

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.