[pratim]

Originally Posted by ACM

Yes cost do go up in the short run, but in the longer run the government can go to a lower tax rate and reverse the impact on tax payers - while adversely effecting those evading taxes.

ACM,
The new tax regime (Kelkar Committee recomendations, I think) that would in force from FY 2011-12 onward is a step in this direction. It talks about simplification of taxation, abolishing tax exemptions lowering of tax rates. I I do not know if there will be a benefit across the board but the salaried class will surely benefit from this.

-Pratim

[ACM]

Originally Posted by pratim

ACM,
The new tax regime (Kelkar Committee recomendations, I think) that would in force from FY 2011-12 onward is a step in this direction. It talks about simplification of taxation, abolishing tax exemptions lowering of tax rates. I I do not know if there will be a benefit across the board but the salaried class will surely benefit from this.

-Pratim

And this specifically will also require deregulation of the Fuel prices - at least for those who are direct consumers. Nothing wrong with subsidees that benifit the poor ONLY but Petrol and Diesel used in Vehicles is hardly that.

The same problem lies in fertilizer subsidees that actually mainly help rich farmers (who are really really well off) become richer. Vs helping the poor farmers who actually do not even have the money to buy subsidised fertilizers.

[aargee]

There's no need to worry on Petrol hike or Diesel subsidiary, no regulation/de-regulations policies required or any oil company losses to be thought any more; all the Govt needs to do is take one bold step to clear off/collect the pending taxes till date. That will take care several times the loss of Indian aviation industry & Oil companies both put together.

@Xingamazon - there's no micro or macro economics involved, one simple bold step for the finance ministry & a gaint leap for the country.

[pratim]

Originally Posted by aargee

There's no need to worry on Petrol hike or Diesel subsidiary, no regulation/de-regulations policies required or any oil company losses to be thought any more; all the Govt needs to do is take one bold step to clear off/collect the pending taxes till date. That will take care several times the loss of Indian aviation industry & Oil companies both put together.

@Xingamazon - there's no micro or macro economics involved, one simple bold step for the finance ministry & a gaint leap for the country.

+10 to that.

Add to that the accumulated total defaulted loan that the top industrial and business houses owe to the nationalized banks (in turn, to common people of this country), we can feed the population of the country that goes to sleep with hunger in their stomach, for years together. I heard that this amount crossed a lakh crores (100,000 crore) of rupees.

-Pratim

[xingamazon]

Originally Posted by aargee

@Xingamazon - there's no micro or macro economics involved, one simple bold step for the finance ministry & a gaint leap for the country.

Hi Aargee,
The viewpoints that I mentioned is the viewpoint of the people when the price increases by a rupee owing to which one misses to see the bigger point i.e. budget sufferign set back of Rs 2000 Cr per day.

I wanted to highlight how few people misuse the LPG for cars and water heaters not understanding that they are actually fooling themselves.

[aargee]

Originally Posted by xingamazon

The viewpoints that I mentioned is the viewpoint of the people when the price increases by a rupee owing to which one misses to see the bigger point i.e. budget sufferign set back of Rs 2000 Cr per day.

I wanted to highlight how few people misuse the LPG for cars and water heaters not understanding that they are actually fooling themselves.

Oh!!! @xingamazon don't get me wrong here; I was not trying to hurt your thoughts, but intended to say that Govt only knows how to harm people who don't make noise & they don't dare to touch big corporates & that's the reason they hike the fuel prices harming the entire common man & favouring the corporates who still defer their taxes. Hope you got the point.

[cuboid]

I do not want subsidies for the fuel I use. But I am dead against paying higher tax for my petrol only for some rich farmer and transport companies get my money as subsidy in diesel and fertilizers. Why can't central and state govt let go of atrocious tax regimes that prevail throughout the country? here in Bangalore petrol retails for 54.26, which itself I believe would be higher than de-regulated petrol price in Delhi.

@xingamazon, I understand your point, and I have argued the same (the subsidy that your getting in your lpg cylinder is coming from your own pocket, and that could be better used to improve the roads) with so many of my friends. But petrol/diesel has become cash-cows for govts, and until and unless they let go off the different high taxes they put, de-regulation is meaningless.

I think all of us would agree to pay for fuel as a commodity, let the companies decide the price and govt put a VAT on that. And let the price war begin among oil cos.

[echo77]

After reading some replies, wanted to clarify:

Note that both petrol and diesel get subsidized (almost equally per liter) once the oil barrel crosses a specific $ ( > $74 IIRC ). It is just that petrol is taxed much more by the center (approx 4 times) than diesel.

But, when the barrel rate crosses the threshold, diesel subsidy in total is much more because diesel consumption is so much more than petrol.

[wildsdi5530]

1. the govt. will never truely reduce taxes.
2. No measure taken will benefit the govt. and the common man. If govt. lets oil into a free market, only common man will benefit. and instead of 'losing' 2000 crores per day, govt. will lose 10 times that much. Imaging where's 12.5% VAT and where's 120% tax on fuel currently.
3. India also produces fuel like US and China. Only it is not feasible to seel the fuel produced in India here itself. Case in Point being Reliance. Cost is pushed up so much by govt. that it's not viable to sell 'Made in India' petrol in India.
4. Govt. doesn't want to collect or clear-off deficit. It is the pity pawn that the govt. rides on. Everytime a fuel hike is planned, the govt. goes like 'Actually to recover the deficit we have to raise prices by Rs.10/- but we the benovelent govt. will raise by only Rs.2/-. So please vote for us again next elections.'
5. Fuel will never become a commodity. It's too rich a cash cow to be killed. A free market would be detrimental to the nation's economy. After all in a Feudal country like ours, the masters have to have money for their foibles.
Democracy (Socialist, secular, republic) is just a word taught in schools. Every educated man knows that 'All are equal' and 'reservation for caste/religion/gender/etc.' cannot co-exist.

[xingamazon]

India is now running on a deficit which is equal to 6.1 % of the GDP. Now for a novice that is really a huge number and a country is in brink of a madness if its near that amount.

That being the case one revenue stream that Indian govt now feels secure about is the tax on fuel. Picture this the govt now almost earns Rs. 25 for every litre of fuel sold in the country.

If the country does away with this taxation, I am sure overnight the deficit will move to more than 10% thats absolute doom for a country. The interpretation for this is that. If India we spend Rs 110 to earn Rs. 100.

Countries like China can afford to do away with the tax as they run budget with huge surplus. But the case of doing away with taxation in India is a deadend.

[aargee]

Originally Posted by xingamazon

If the country does away with this taxation, I am sure overnight the deficit will move to more than 10% thats absolute doom for a country.

What you're saying is absolutely true, but the point I'm trying to say is, try to focus where the revenue is even more, there're source of income is even more in other areas, why not touch them instead of touching the basic needs. Just think about this, fuel price hiked, every commodity value including food & transportation will be increased. However (incase) the fuel price comes down, the prices of other commodity stays down as well (ever heard an auto driver saying, this much is sufficient or have you experienced govt transport buses reducing their fares?)

My point - This is the only step the Govt is taking consistently since Independence & why not change it to make some other source of revenue?

[aaggoswami]

Originally Posted by xingamazon

India is now running on a deficit which is equal to 6.1 % of the GDP.

That being the case one revenue stream that Indian govt now feels secure about is the tax on fuel. Picture this the govt now almost earns Rs. 25 for every litre of fuel sold in the country.

If the country does away with this taxation, I am sure overnight the deficit will move to more than 10% thats absolute doom for a country. The interpretation for this is that. If India we spend Rs 110 to earn Rs. 100.

Countries like China can afford to do away with the tax as they run budget with huge surplus. But the case of doing away with taxation in India is a deadend.

1) What is total amount of tax, both direct and indirect, collected by GOI ? On everything we have tax. Right now, if we sell our property ( house ), that is considered as an income and will be taxed. Tax is everywhere, whether you buy a small product like Music system or a car, or if you service your car or music system. Its too much. Indian government is working very hard to find ways to earn money.

2) Why not give subsidy to Reliance ? When reliance is selling fuel, for IIRC, they are taxed, so why no subsidy to Reliance ? What explanation does GOI have ?

3) If we are so much serious trouble as you have mentioned, there is something terribly wrong in India. Why always India cannot afford to do this, that, etc ? Fact is tax is very high on fuel. Those who are paying income tax with honesty have to once again pay a lot of money in tax on fuel.

[aargee]

Originally Posted by aaggoswami

Indian government is working very hard to find ways to earn money.

Govt has a side income generated from the middle class; boy!!! the other day I was purchasing groceries & noticed how much the price of commodities has been increased in last 6 months. One example is the price of half KG Kissan Jam was around 68, then 75 & now its 89!!! all this in last 6 months. If the fuel prices are hiked, then I'm certain this should touch Rs 95.

Originally Posted by aaggoswami

2) Why not give subsidy to Reliance ? When reliance is selling fuel, for IIRC, they are taxed, so why no subsidy to Reliance ? What explanation does GOI have ?

I couldn't get the point here; Are you saying that HPCL/IOL/BPCL are the ones given tax subsidy for selling fuel while Reliance is not given. Appreciate if you can elaborate this point.

Originally Posted by aaggoswami

3) If we are so much serious trouble as you have mentioned, there is something terribly wrong in India.

Pls, I would like to see this rephrased to, there is something terribly wrong with people governing India.

Originally Posted by aaggoswami

Those who are paying income tax with honesty have to once again pay a lot of money in tax on fuel.

Sometimes I feel like we're in middle ages where there was tax on stone & tax on tax. time for another Robinhood!!!

[xingamazon]

Originally Posted by aargee

I couldn't get the point here; Are you saying that HPCL/IOL/BPCL are the ones given tax subsidy for selling fuel while Reliance is not given. Appreciate if you can elaborate this point.

@AARGEE, your understanding is right. I mean what @aaggoswami has mentioned in his post is correct.
These subsidies given by govt are given only to state owned refineries not to the private players like Reliance and shell.

Thats was the reason as a protest Reliance and shell has shut shop when the crude oil prices had increased. But they came back to business once the crude pricess fell.

[wildsdi5530]

Reliance and shell does not need subsidy. They just need a reasonable tax system and not 120% tax. If left on their own, they would sell petrol at Rs.26/- and Diesel at Rs.24/-. But the other PSU's will be up in arms.
And you say that India is running at a 6.1% deficit on GDP. I find it hard to believe. Are you saying that as a country, India is mismanaged? Our country has VIPs traveling first class all over the world, we have new roads and bridges being built, we have the richest cricket authority, we offer 2-5 Lakhs as ex-gratia to the next of kin to suicide victims and accident victims (instead of encouraging insurance).
We are one of the richest countries. Not on paper perhaps, but in reality. China is a poor man's country. They ride bicycles and have forums like sorebacks.com.
The whole discussion is a laugh. Truth is the govt. is traditional about cash cows.