[astrodex]

While I feel the pain of high fuel costs, I do feel taxing fuel in a country like India is a great equalizer. Even with income tax reforms and GST the tax base of our country is abysmally small. It's only the salaried that pays the brunt of it. We don't have a very good direct taxing mechanism and there are too many loopholes.

It is here that fuel taxes could be considered as an option. Even if you increase GST, there will be many who would not pay it. Fuel is the only one that currently has negligible tax leakage. And it is a consumption tax. As a percentage fuel usage is a good barometer of a person's wealth.

I get that it has a lot of flaws and their initial attempt at taxing the premium 4 wheeler fuel petrol has skewed up with large number of diesel engines. But still it might be the best way to tax we have now. With the argument of climate consciousness and EV push, I think high fuel prices are here to stay. Now, only if we can get correlating reductions in other taxations.

[hrk997]

My personal opinion, given that team bhp is a non-political forum, is that this thread ought to be deleted. To criticise the price of fuel is to criticise the government itself. Politics is a touchy subject, and this thread is basically a public record of how the common man is being scammed. I wish prices were lower, but these are the hallmarks of democracy and there's nothing that can be done about it.

[doxinboy]

Originally Posted by hrk997

My personal opinion, given that team bhp is a non-political forum, is that this thread ought to be deleted.

On the contrary, I prefer this thread to be a sticky. There is nothing political in calling a spade a spade. The rise in fuel prices have impacted me and I have altered my lifestyle to the new reality.

I now use public transport for work, a combination of metro and bus. Empting half my wallet at Shell every week so that I can drive solo in my seven seater considered a necessity in the heavy bangalore traffic is a luxury now, that I can't afford anymore.

I always wondered in the last decade why the two wheelers quee up at petrol bunk the day the government announce a price increase of less that 30 paise. What difference does it make to these folks to wait so long in order save few peanuts? When the government policy hits you personally that's when you feel the pain.

There is nothing much I can do. Atleast I was able to share my frustration with my fellow enthusiasts here instead of building up anger within. Thanks for the thread.

[pandey.jai]

Originally Posted by astrodex

While I feel the pain of high fuel costs, I do feel taxing fuel in a country like India is a great equalizer. Even with income tax reforms and GST the tax base of our country is abysmally small. It's only the salaried that pays the brunt of it. We don't have a very good direct taxing mechanism and there are too many loopholes.

It is where that fuel taxes could be considered as an option. Even if you increase GST, there will be many who would not pay it. Fuel is the only one that currently has negligible tax leakage. And it is a consumption tax. As a percentage fuel usage is a good barometer of a person's wealth.

.

Well, if taxing fuel is an equalizer, then why not stop or lower income taxes for people and only stick to taxing commodities like fuel, gold etc?

[SoumenD]

Originally Posted by Exhuberance

Which brings me to wonder - has anyone in this forum changed substantially their fuel consumption habits?

Don’t think that would make me change my habit of using private transport anytime soon as am still paranoid about covid and hence avoiding external contact as much as possible.

However I did notice a tankful(35 litres) took around 800INR more this October compared to October 2020. Does it affect me? Currently, Not really as usage is anyways minimal due to WFH.

Originally Posted by careind

Petrol has been increasing 100% every decade, at least in the last 15 years. Why should it be different now?

Triple digit (100) probably breached the psychological barrier.

But yeah I agree with the comments here that if fuel is the most effective taxation tool, why is salaried class burdened with income tax as well? We first pay (income taxes) through the nose while getting salary & again on these consumables because other fellow countrymen aren’t paying their taxes honestly & government can’t bring them in line. And after all that taxation we get roads full of potholes and no health benefits

[rascalangel]

Originally Posted by ABHI_1512

^^

Wonder how a country which just got independence managed to build IiTs, IIMs, AIIMS, various atomic centers, various universities, various colleges, road projects (of course not of ALE standards) and various developmental projects, polio eradication and most of all, fought three wars and still didn’t tax the people like the way it is happening now !!

You missed the best one... A world class space program!

[Aravind_M92]

I don't see the point of raising petrol prices! It's as if we are paying 100% tax for importing it and further taxes for selling it across. And for the past weeks it has been on the constant rise.

Earlier it was argued that taxes on the fuel prices were used for vaccine procurement as it was the most sold commodity. What a bluff and stupid argument that was! During the pandemic, most vehicles used were by essential service providers. It's as if we had to work our a***s off and also pay for the vaccine programs indirectly. And to add more frustration, we were promised incentives and God knows where those incentives are. And the best part, on paper all the incentives have been sanctioned long back!

Well that was fine and we all did bear the brunt. But now that we have a 'unlock' going on where all the revenue generating shops are now running at full capacity, isn't the government generating enough revenue to sustain the vaccination and other programs?
If fuel prices continue to rise, there will definitely be a huge rise in the price of common commodities. I currently stay at a rural area where a basic need, tomatoes are being sold for ₹15 a kg. But the same is being sold at over ₹50 in Chennai. And the worse part, due to high transpiration prices, a considerable amount of the produce is being discarded. If this continues, I believe a economic breakdown will happen soon.

I always thought of the current government as the poultry farmer who killed to gold egg laying duck to get all the benefits instead of holding on to it and reap the benefits. Maybe this five year tenure makes them to work tirelessly to get the maximum benefit rather than consider the good of the masses. And with no strong opposition, I believe this is to continue for a foreseeable future

[vharihar]

Originally Posted by ABHI_1512

Wonder how a country which just got independence managed to build IiTs, IIMs, AIIMS, various atomic centers, various universities, various colleges, road projects (of course not of ALE standards) and various developmental projects, polio eradication and most of all, fought three wars and still didn’t tax the people like the way it is happening now !!

The things you mention happened in 60 years. This govt is trying to build several things in a very short time, its been just 7 years since it came in power. There are several firsts in this govt, such as a 8-lane 1500 km expressway, bullet-train project, proliferation of metro construction in a zillion cities, etc, all of which in active construction. And oh BTW, AIIMS's, IIM's and IIT's are still being constructed. I don't want to derail this group, hence not sharing.

Sample this: It took a Nitin Gadkari under the Modi govt to come and build the Kollam and Alappuzha bypasses in Kerala, projects which till then had been languishing for 40 years! (Yes, thats right, 40 years! Google it)

To reiterate: I am not with the govt in high fuel taxes. But for anyone who says that this govt has not used our tax monies well, I vehemently disagree with them. Infrastructure building is a key enabler for economic growth. Build it, and it'll come. Keynesian economics, as they say. The dip in GDP is likely due to structural reforms. I don't know much about it, am not going to wade in there. But I'm convinced about the integrity of this govt and am hopeful we'll see an uptick in GDP. Any govt who splurges on infrastructure development with advanced machinery thrown in (indicating sincere intent), is not the one you should suspect.

Originally Posted by ABHI_1512

So many deaths occurred during the second wave of Corona and yet the authorities are shameless enough to not admit one death due to shortage of oxygen while making full page advertisements and taking the credit for vaccinations. And we expect them to reduce the fuel prices

Corona situation has been a harsh crisis world over. India's situation is much better than many other developed countries. Of course, if you read agenda-driven media like NYT, you'll get a different picture. But hey, that's NYT for you, they run an agenda where they conveniently overlook the terrible situation in their backyard and misreport about India.

[carboy]

Originally Posted by livetodrive

As someone from union Government said...are we paying for free vaccines? Seems Government is compensating it's losses in Covid with surged fuel prices. Once the losses are compensated and important elections are round the corner, can we expect a price reduction?

COVID vaccines cost around 40,000 crores or so. Excise Collection from Fuel is more than 3,00,000 crores currently. It used be less than 1,00,000 crores back in 2014.

So excess excise collection from higher excise duty just in one year would be enough to buy vaccines not just for India but for several other countries. Plus there is also PMCares Fund which collected money for COVID. Just in the first 50 odd days PMCares collected 10,000 crores. After that, they stopped releasing information about it.


Metro tickets are expensive - 45 Rs one way. It's not for the poor (who are a majority of our population) who still mostly travel by Local Trains & Buses. They still take the bus & spend 3x to 4x as much time as the metro to travel between East & West).

[sentra26]

Keeping politics aside, one thing to understand is that fuel prices are not going to come down. They never have. Petrol prices have constantly been increasing at exponential rates (for the last two decades). No party will promise that and no party will do that.

The energy crisis is looming. Crude Oil prices are up by 65%. Even natural gas prices have been up more than 250% this year (280% in Europe). All major economies are facing the brunt even though some have dealt with it in different ways. US has been fracking for the last 70 years. In India, water and other issues do prevent the usage of fracking to get shale oil and natural gas. Not saying fracking is the right thing to do either.

Indian energy consumption has steadily been rising. Specifically in India, coal shortages are also leading to more dependency on oil.

Overall, the writing on the wall is that this will be the push to transition away from fuel. The transition to EV is already happening and one can hope that the charging infra would catch up. Many large companies have expressed interest in Hydrogen as well and are in advanced talks with western counterparts. In the next two decades we will see the jump onto EVs/Hydrogen. Diesel and petrol will be luxury for those who still want to drive these cars.

The government needs to be proactive and reduce taxes to alleviate the burden but that is a different story altogether.

[GeeTee TSI]

I feel that by obsessing with levies on fuel, aren't we missing the elephant in the room, the base price of crude itself? We as a country do not have much bargaining power as far as crude is concerned and it is a seller's market by a cartel. Even with realtime optimisation of levies (if ever such a thing is considered) there is only so much that it can do to soften the blow to us, users.

That oil producing countries who can hold pretty much any importing country to ransom as far as prices are concerned; is taken for granted or maybe we're resigned to it. I am afraid till the time we move away from fossil fuels for our vehicles we are very much under this sword of Damocles

[carboy]

Originally Posted by GeeTee TSI

I feel that by obsessing with levies on fuel, aren't we missing the elephant in the room, the base price of crude itself. We as a country do not have much bargaining power as far as crude is concerned and it is a seller's market by a cartel.

Even were Crude was selling at 45$ a barrel, we never got to benefit from it because our govt had increased Excise duty on the petrol.

[SN88]

Originally Posted by Jude300

I would go further and ask where is the money collected as tax going? Look at the graph and you will see the incremental income to the government driven by the tax. Have we seen proportional developmental investments? A big NO. Have we seen significant improvement in public transport infrastructure to encourage people to use public transport? Again a big NO. A good economist will address the problem with sustainable solutions and not try to increase tax to control demand. Can someone prove that the consumption of fuel has reduced because of higher taxes? Even after months of lockdown, our crude imports have been more than 2015 levels in 2020. Only the irrational devotee will have a story otherwise.

Attachment 2226468

The irrational devotee - Hamaare jawaan seema pe lad rahe hai..

[AirbusCapt]

Originally Posted by DigitalOne

I follow infrastructure news like a freak . It is true that this government is doing much more than previous governments. You don't have to believe me, just listen to even opposition politicians speak about Gadkari, or read quarterly reports of L&T or other infra cos. I can quote examples but that will distract from my central point below.

Fuel taxes are NOT the way to fund this. High fuel taxes affect everybody. End users of this infrastructure have to pay for this, not every citizen of India. Increase the tolls, metro fares, ticket prices etc. Don't put this burden on someone who may never use this infra.

That's a false argument. I don't use the municipal hospitals, don't buy rice and grains from government, don't buy kerosene, don't use municipal schools, buses etc. Why is my 33% income tax used for such things which I'm not using?

Fuel taxes are extremely high I agree, but from the point of view of fuelling a new recession only. If the government doesn't tax fuel, they will increase gst to say 30% and income tax to 50%. Will you be happy in that case? Atleast now we have a choice to use less fuel.
Having said this, I still maintain the government is bungling bigtime in handling the economy. Unless they appoint experts, they will lead this country to ruin.

[souvikjana83]

Let me also put forward a few points since we are discussing this.

First of all the Govt has to pay salaries of all the Central and State Employees. The latest pay commission has really put a burden on the Govt to pay salaries and also maintain enough budget for all its programs. On top of it, many industries have closed down due to pandemic/slowdown. Hence income of Govt from Industrial Taxes have gone down as well. Govt has no option but to generate revenue, they will have to tax fuel. It is the easiest way to earn the moolah.

On the other hand, if Govt bring down fuel under GST, its revenue will decrease for sure but it may kickstart those industries which are dependent on fuel. Spending will increase and overall economy may rebound. But there is no guarantee as such.

And the biggest question is: If the govt changes in 2024, will the new govt reduce taxes on fuel??