[rugsrags]

Was wondering. Is this the reason the government stopped the subsidies on hybrid cars? Lower consumption of fuel means lower revenue generation, emissions be dammed. Probably the reason why EV isn't being promoted the way it should either.

Is BS-VI the same reason too? Make BS-VI fuel the reason to increase prices (after all who in the public will go deep dive into the actual changes in cost of production of BS-VI fuel).

Revenue generation to provide the fodder for political gains in imparting freebies to the masses (votebank) at the cost of honest taxpayers who are fleeced at every opportunity. Even at this critical juncture no relief provided to the MSME sector and the small business owners who in turn are trying their level best to look after the livelihoods of their workers with no support.

[ZenMaster]

There is also news that the govt. Is going to enact a 15 year scrappage policies for cars(Don't know if its applicable to commercial vehicles) to inject new demand for cars as well as to increase industrial output of India's steel and metal industries

[sunnsood]

Originally Posted by ZenMaster

There is also news that the govt. Is going to enact a 15 year scrappage policies for cars(Don't know if its applicable to commercial vehicles) to inject new demand for cars as well as to increase industrial output of India's steel and metal industries

I have been hearing about this for over 3 years now. I think it won't happen this year. Budget 2020 has no provision for it and since GOI is in no mood to give anything to car owners, it definitely won't happen.

[Dry Ice]

Would be interesting to see how much of this is rolled back as and when the demand starts picking up. I, for one, don't have much hopes of a rollback anytime soon.

[lurker]

Originally Posted by Dry Ice

Would be interesting to see how much of this is rolled back as and when the demand starts picking up. I, for one, don't have much hopes of a rollback anytime soon.

next elections for sure. Until then make hay.

[TD_GHY]

Originally Posted by Miyata

Unpopular Opinion:

They did the right thing by increasing the taxes and keeping fuel prices high! While off and on I am at times opposed to higher fuel prices, this time I think it is the right thing to do.

With reduced direct and indirect tax collections (partly a necessary step and partly debatable), the GoI needs some measure to have some revenues coming in / building up. On one hand we clamor for better government support towards less privileged (in particular) on the other we cry foul with some, admittedly questionable, GoI practices for improving their revenues.

We do all understand the repercussion in terms of inflation for essential goods, hopefully though, some taxes will come down there and owing to the lockdown experience of ours, we can still manage to chug along with a slightly reduced consumption to possibly offset some aspects of that inflation!

Still, in spite of those failings, I still think it is a right thing to do to have the fuel prices on the higher side at this point in time.

Increasing indirect taxes is never the right thing to do. The most fundamental reason is because it impacts all classes equally. And the repercussions of increase in indirect taxes is felt by all, the lower classes by a much higher degree.

Petrol and diesel at even Rs100 a litre doesn't bother the affluent. They anyway are getting benefits every passing day, like reduction in direct taxes for them. Those that suffer are the people with limited means. Petrol and diesel prices have always been a cash cow for the Government, which should stop sooner then later. Every essential good required by the masses is transported by them, and a single rupee increase results in multiple rupee increase in prices of commodities which ultimately harms the common man. Commodities in villages are costlier than cities because of the transportation costs, and any increase in fuel prices affects their ability of consumption.

Also, increasing indirect taxes makes goods less demanding, which hampers overall economic growth. Again, bad for the nation as well as its nationals.

Giving relief in indirect taxes for the common man and increasing direct taxes is the way forward. It was suggested by a few IRS officers as well some days back, but was met with vehement opposition, including here at Team BHP. Also, powerful lobbies of the rich are at work to make sure the tax impact on them is the minimum.

[Thermodynamics]

Fuel prices affect everyone regardless of rich or poor or a business man or a salaried person or even unemployed.

We can understand the crisis situation and Governments are desperate for funds. But people are also affected by crisis. IMO, If there is a fall in crude prices, they may increase excise duty/ VAT in their capacity but please pass on at least some benefit to the end user. Everyone is affected, not just the Governments.

[jithin23]

Fuel prices are critical to the nation but that is the least they can protect for its citizens. Even at times of crisis, the government is keen on filling it's coffers despite the common person struggling to make his/her ends meet. This has a cascading effect on the entire society and what I feel is daylight robbery by the government when oil prices are plummeted to the upper negative value.

When will we get at least what we need or what we need to voice out :(

[chieftain]

Originally Posted by Tuisha110HP

c) A state which has been giving free rides to public and relief of electricity has run out of funds. Need retrospective review? Better management?

Most states had already been losing money thanks to the global economic slowdown and CoViD has sucked them dry. The centre is not helping much (they seem to be more interested in renovating central Delhi). The steep hike in diesel probably also serves to bring the prices of petrol and diesel close together to discourage the ownership of diesel vehicles.

[lurker]

When the powerful and weak are affected equally by a crisis, the powerful can impose punitive measures on weaker to keep their power relatively intact.

Case in point Pakistan and relationship of its junta with its captive population. They impose ever increasing costs on public for failing economy.

[xway]

I disagree with many comments here who state that increase in taxes on fuel prices will increase price of everything else.

In reality fuel prices will remain stable, as the fuel prices reduce - increase the taxes on it so that overall prices remain same.

So overall there will be no impact on transportation costs - this windfall is being absorbed by the government to tide through the crisis and not filling its treasury.

Direct taxes suck the common middle class salaried man dry and Indirect taxes impact everyone including the middle class.

Increasing taxes on fuel is a good move, and similarly all un-necessary items barring food and essentials can be placed in highest GST bracket or even other Covid Cess charged.

Items link Liquor, Guthka, Perfumes, Luxury products, Entertainment etc. should be taxed higher up and can be revenue earners in these times of crisis. If anybody buys these they have a choice and hence avoid.

[drpudhi]

I feel 'middle class' is one of the most abused word in India. Everyone under the sun from a TVS XL riding kirana shop owner to a Honda city riding professional calling themselves as middle class. The middle class is supposed to be the set of people in the middle of social/ economic hierarchy. But in an extremely poor country like ours, it has no meaning. The private car ownership in our country is 22 per 1000 people. Even after giving leverage for few rich people not owning cars, if you own a car, any car, for personal use like most here, then you're possibly among the richest 2% in the country. So, the connotation that direct taxes greatly affect the middle class is not entirely true, because we are not the middle class, though we would like to believe so. But indirect taxes disproportionately affect the middle and weaker sections of society and is not the way forward for an inclusive society.

[rjainv]

For folks advocating direct taxes instead of indirect taxes, I feel we are just squeezing the guys who are already paying substantial part of their income as taxes.

Atleast with indirect taxes, atleast people who are earning high but evading direct tax get to pay some tax to the government.... Unfortunately poor guys suffer more than what govt would get as additional tax from those rich guys who ought to pay taxes.

We really ought to bring the tax evaders under tax net, and bring down the direct/indirect taxes overall for everyone.

Ofcourse easy to say, hard to do... Atleast till there is a power politics at play.

[Annibaddh]

Originally Posted by TD_GHY

Increasing indirect taxes is never the right thing to do. The most fundamental reason is because it impacts all classes equally. And the repercussions of increase in indirect taxes is felt by all, the lower classes by a much higher degree.

On the contrary. In India escaping Income Tax is far too easy given the cash nature of transactions, and income. With focus on GST, government can actually heavily control tax evasion by ensuring key transportation routes are well monitored. The volume and value there allows them to build AI models on tax collection, and identify potential red flags on evasion.

Indirect taxes are directly a consumption tax. If you use more fuel, you pay more tax. You watch more films in the theatre, you pay more Entertainment Tax. Etc. Etc.

As for the impact on cost of goods, fuel is an extremely small portion of cost of goods in the country as of today. Having run a plant P&L myself, for a couple of sectors, the incremental cost on goods overall is miniscule. And in this case zero, given there's no actual increase in prices. Just no reduction

There is an economic argument however to be made for lower taxes overall. Consumption needs an immediate loft if the economy is to recover in any way. In an environment where money is hard to come by, we will enter a savings mindset. Rather re-enter. One obvious big opportunity is for India to occupy key industries where China is under pressure and replace it as a key manufacturing destination. A concerted policy here can help. A swift, decisive, concerted policy. Hence we see rapid attempts to dilute labor laws, environmental restrictions etc.

I think if the government were smart they can easily offset this by going green on vehicles faster. And moving to clean energy more rapidly. Give tax breaks as an incentive but with "green" being a qualifier. This will generate both employment and cash. And in the long term, tax. At the same time keep forex rates in check.

[saket77]

JH increases fuel prices by Rs. 2.50/- per liter. This is applicable for both petrol and diesel.
It’s not in the news as yet but the hike is confirmed.