[civic-sense]

Call it subsidy or a tax-break, in effect, diesel car owners enjoy an unfair advantage over the petrol counterparts. Either the govt should reduce taxes on petrol to the levels of diesel, or increase the taxes on diesel. If they are not able to do that, they should add a diesel surcharge when the vehicle is sold.

Diesel cars are priced high because they are expensive to manufacture. In addition to the sturdier parts that go into the engine, the suspension etc, most of them have a turbocharger too. I don't think there are any additional taxes on diesel cars. Please correct me if I got it wrong.

[shankar.balan]

Hey pal
I didnt post that point of view- you've misquoted me - I dont even own a petrol vehicle as of now.
please correct the quote!

Originally Posted by amitk26

Bear in mind so called fatcats pay Rs 81000 more in excise duty at the time of purchase , In todays terms if subsidy is around 10Rs ( as per government claims actually there is 0 subsidy) then this amounts to 8100 Liters of Diesel assuming an average of 12 - 13 KM /Liter which most Diesel cars / SUV deliver it is roughly a lakh KM of driving or 4 years of usage.
This excise duty was arrived at keeping the price levels at the time when duty was fixed.

Any way why exactly you think Diesel / Petrol should have excise duty in tune with liqueur or Tobacco as it is now and not in line with Coal , Iron ore , Gypsum or any other natural resource ?
Do away with subsidy rationalize the tax.

[amitk26]

Originally Posted by shankar.balan

Hey pal
I didnt post that point of view- you've misquoted me - I dont even own a petrol vehicle as of now.
please correct the quote!

I don't know how your ID came in the quote it was from noopster, Can't edit it now.
Sorry about that.

[amitk26]

Originally Posted by civic-sense

Call it subsidy or a tax-break, in effect, diesel car owners enjoy an unfair advantage over the petrol counterparts. Either the govt should reduce taxes on petrol to the levels of diesel, or increase the taxes on diesel. If they are not able to do that, they should add a diesel surcharge when the vehicle is sold.

So in other words you actually want to protest higher price of Petrol you think there is no way government can be convinced to reduce that so increase retail price of diesel so other guy also pay high.


both Diesel and Petrol are heavily taxed but government gives some tax back on Diesel seeing more spiraling impact on inflation is more appropriate statement.

[civic-sense]

Originally Posted by amitk26

So in other words you actually want to protest higher price of Petrol you think there is no way government can be convinced to reduce that so increase retail price of diesel so other guy also pay high.

both Diesel and Petrol are heavily taxed but government gives some tax back on Diesel seeing more spiraling impact on inflation is more appropriate statement.

Sad, you don't get it.

Diesels are taxed low for a reason. There is no reason why that advantage is extended to passenger cars. I know that diesel car owners are just taking advantage of the situation, but my point is that it is unfair. Both to petrol car owners and the tax payers of the country.

[amitk26]

Originally Posted by civic-sense

Sad, you don't get it.

Diesels are taxed low for a reason. There is no reason why that advantage is extended to passenger cars. I know that diesel car owners are just taking advantage of the situation, but my point is that it is unfair. Both to petrol car owners and the tax payers of the country.

LOL While you can say I do not get it , I reciprocate the feeling and tempted to say instead of looking at whole macro economy and implications of so called subsidy you are focused on petrol and next guy using Diesel.

There are multiple assumptions working here.

1. Diesel is taxed low : Considering the total tax and also the exempted portion termed as subsidy , I would say it is taxed slightly higher then other commodities but tad lower then petrol.

2. Taxing Diesel Low somehow helps the general population.

If this assumption is correct then taxing Diesel and Petrol both low should help as well. If government does away with this subsidy business general population will feel the heat and pressurize for accountability and thus overall situation will improve overall.

It is just a knee jerk reaction like importing Onions , Yes onion prices are crashed artificially but does it control inflation ? The answer is big no.


3. Taxing diesel low and diesel car owners taking advantage is unfair to petrol car owners , While it is advantageous to diesel car owners how it is unfair to petrol car owners defines the logic.
Yes taxing petrol high is disadvantageous to them but how diesel is taxed is immaterial to them.

[civic-sense]

Originally Posted by amitk26

LOL While you can say I do not get it , I reciprocate the feeling and tempted to say instead of looking at whole macro economy and implications of so called subsidy you are focused on petrol and next guy using Diesel.

There are multiple assumptions working here.

1. Diesel is taxed low : Considering the total tax and also the exempted portion termed as subsidy , I would say it is taxed slightly higher then other commodities but tad lower then petrol.

2. Taxing Diesel Low somehow helps the general population.

If this assumption is correct then taxing Diesel and Petrol both low should help as well. If government does away with this subsidy business general population will feel the heat and pressurize for accountability and thus overall situation will improve overall.

It is just a knee jerk reaction like importing Onions , Yes onion prices are crashed artificially but does it control inflation ? The answer is big no.


3. Taxing diesel low and diesel car owners taking advantage is unfair to petrol car owners , While it is advantageous to diesel car owners how it is unfair to petrol car owners defines the logic.
Yes taxing petrol high is disadvantageous to them but how diesel is taxed is immaterial to them.

Taxing two commodities differently, when they are both used for the exact same use is what is unfair. The whole idea of pricing diesels lower started decades ago when diesel was just used by buses and trucks. Public transport and goods carriages needed low cost fuel hence was priced low, while petrol was priced high via higher taxes because cars were considered luxury. The scene changed in the 90s, when cars started using diesel because of the cost advantage it was offering. Now, you might claim that it is not because of the cost advantage, but for torque, drive-ability etc. That is not true. In the late eighties a lot of amby owners threw away their petrol engines and plonked imported diesel engines in them. I don't think they got any significant advantages other than lower running costs. Now it is not the aam aadmi that drive diesel cars. Real aam aadmis still drive Maruti 800s, Altos, Santros and Wagon Rs, while it is the upper middle class who could spend a few lakh more and buy the diesels. Almost all the BMWs, Mercs, Audis, Skodas, VWs sold are diesels. Because, for the buyers spending a lakh more to buy a 20+ lakh car does not make any difference. People who stretch to B+ from the aam aadmi cars, content themselves with a petrol swift. Those who stretches further buys a Ldi, sans all safety devices. No points now for guessing why Maruti left the Zdi version out.

There is a need in this country for people to become more responsible. The bane of this country is that people try to bend all rules to their advantage. Leave the tax cuts and the subsidies to those who really need them. The government should either remove all tax cuts and subsidies and make this a capitalist country. Or give tax cuts only to the needy, the socialist way. NOT the current way, tax cuts for the rich and heavy taxes for the poor (Er, the aam aadmi).

[noopster]

^^Amit, are you saying that if no subsidies were in play, the price of petrol and diesel would NOT be the same/comparable? That is the only point under discussion here.

The general belief (which I share, not sure whether right or wrong) is that diesel prices are kept lower than market value so that the cost of essential commodities do not shoot up (since they are mostly transported using diese vehicles). So if today the diesel prices are say 40/litre and petrol is 65/litre, the general understanding is that if the market had its say, they would even out somewhere in between, say around 50-55/litre. Is this understanding wrong?

[Aroy]

If diesel subsidy benefits the "aam admi" through subsidies, then same would apply to taxi operators. After all those who are well off have chauffeur driven cars and do not need taxis! If we take these segments out along with Government - Administration, Armed Forces and Railways, then we are left with a user base which in my opinion does not consume even one percent of diesel.

So what do we want? Do we set up parallel distribution system with all its ills and loop holes, or accept that a minuscule number who do not deserve it are benefiting? Government's track record with differential pricing is pretty dismal, and in the end benefits accrue more to the black marketeers than to the target audience. I say, let the diesel prices be, even if a few of us benefit from it, as it is in the interest of the "greater good".

[srishiva]

Diesel is not taxed less. Its subsidized. If it was taxed less then Shell would have sold it at competitive prices. But again the giver/taker is the same govt.
Anyway, 15% of users of diesels are passenger cars, rest are so called enablers to keeping the inflation under check!!

[amitk26]

Originally Posted by noopster

^^Amit, are you saying that if no subsidies were in play, the price of petrol and diesel would NOT be the same/comparable? That is the only point under discussion here.

Both would be same but I am emphasizing that they should be taxed right so both are priced right.
India has lowest refining costs in the world and lowest manpower costs and Dealer margin still the fuel costs more almost equal to western Europe due to insane tax levied by government . Except Alcohol and Tobbaco government does not levy such tax on any other commodity.
Some 20% of the crude is sourced from indigenous sources so the current price levels could be brought down if tax is leveled.
Also that is not the only point under discussion when people bring in all sorts of things.

Originally Posted by Aroy

If diesel subsidy benefits the "aam admi" through subsidies, then same would apply to taxi operators. After all those who are well off have chauffeur driven cars and do not need taxis! If we take these segments out along with Government - Administration, Armed Forces and Railways, then we are left with a user base which in my opinion does not consume even one percent of diesel.

So what do we want? Do we set up parallel distribution system with all its ills and loop holes, or accept that a minuscule number who do not deserve it are benefiting? Government's track record with differential pricing is pretty dismal, and in the end benefits accrue more to the black marketeers than to the target audience. I say, let the diesel prices be, even if a few of us benefit from it, as it is in the interest of the "greater good".

100% spot on , If government wants really Diesel to be subsidized for farmers it can issue direct subsidy that is Diesel coupons to farmers which they can give at petrol pump and get the equal amount of money deducted from the total bill.

Originally Posted by srishiva

Diesel is not taxed less. Its subsidized. If it was taxed less then Shell would have sold it at competitive prices. But again the giver/taker is the same govt.
Anyway, 15% of users of diesels are passenger cars, rest are so called enablers to keeping the inflation under check!!

If the total tax is double the amount offered as subsidy to the Oil marketing companies in terms of long term bond it can not be called subsidy in it's true meaning. It is kind of tax refund.

If government is so willing to give subsidy and it really believes that subsidy helps then why not direct subsidy to the affected groups ?

The fact is that Oil pool is best way to cover the fiscal deficit in budget and governments have used oil pool account for cover up job for almost 2 decades now.

[amitk26]

Originally Posted by civic-sense

. The scene changed in the 90s, when cars started using diesel because of the cost advantage it was offering. Now, you might claim that it is not because of the cost advantage, but for torque, drive-ability etc. That is not true. In the late eighties a lot of amby owners threw away their petrol engines and plonked imported diesel engines in them. I don't think they got any significant advantages other than lower running costs. Now it is not the aam aadmi that drive diesel cars. Real aam aadmis still drive Maruti 800s, Altos, Santros and Wagon Rs,

1. That is a side effect of wrong government priorities.
2. Fictitious Aam Aadmi as defined by government and commies does not drive any car he lives naked in caves and consume some 100 or so basic items defined for aam-aadmi in every budget.

Originally Posted by civic-sense

There is a need in this country for people to become more responsible. The bane of this country is that people try to bend all rules to their advantage. Leave the tax cuts and the subsidies to those who really need them. The government should either remove all tax cuts and subsidies and make this a capitalist country. Or give tax cuts only to the needy, the socialist way. NOT the current way, tax cuts for the rich and heavy taxes for the poor (Er, the aam aadmi).

If government is really keen on offering subsidy and truly believes subsidy helps it can very well issue some Diesel coupons or direct subsidy.
Fact is that this so called subsidy is an escape route for sky high indirect tax on fuel which is the main source of keeping fiscal deficit at sane level and allows wasteful functioning of government.
Fuel taxes are one of the biggest revanue earner and government can keep on milking this source as long as Aam-Aadmi and those who shed crocodile tears for this Aam-aadmi believe that there is a subsidy to help him out and keep the noise level down.

[Aroy]

Originally Posted by srishiva

Diesel is not taxed less. Its subsidized. If it was taxed less then Shell would have sold it at competitive prices. But again the giver/taker is the same govt.
Anyway, 15% of users of diesels are passenger cars, rest are so called enablers to keeping the inflation under check!!

Taking your number of 15% for personal diesel vehicle, that is by numbers and not usage. Take the case of a truck. If it runs 500km/day (not that unreasonable) it will consume between 100 and 150L daily. If it is a taxi or Government vehicle it will run between 200 and 700km/day on an average - 15L to 50L per day. Now take the case of diesel private vehicles. The majority of them run less than 50km/day, that is not even 4L, so an average of 2L/day over the month. Note that commercial vehicles have consistent daily run, it is their bread and butter. The number of taxis and trucks outnumbers private diesel cars at least 1 to 5. So the diesel consumed by personal diesel vehicles is less than 1% compared to other commercial vehicles.

My case is that with such low consumption of diesel by private vehicles, does it make sense to raise a hue and cry over the issue. This is same as objecting to subsidy on cooking gas supplied to all private users. Here the subsidy works the other way, commercial users are penalised as they are supposed to buy cooking gas at commercial rates!

[noopster]

Originally Posted by amitk26

Both would be same but I am emphasizing that they should be taxed right so both are priced right.

OK I have my answer.

Also that is not the only point under discussion when people bring in all sorts of things.

It's a simple enough poll: Should SUV owners pay market price for diesel? My answer: they should.

[alpha1]

My god, this debate is still raging on!!!

Kudos to the internet ...

I would request everyone posting to first read the topic.
Should SUV owners pay market price for Diesel?

The trouble is that this is not free market rate - but govt fixed rate.

So the topic should be more in lines of free-market rate. That can be calculated by using the import parity prices of all petroleum products.

Next question would be - why is the price of indian diesel considerably lesser than indian petrol, whereas in rest of free-market world - both are almost same. In fact, in the US, diesel is often more expensive than gasoline. Ref: (Gasoline and Diesel Fuel Update)

So why?

Now all these points have been debated ad nauseum in this thread, and everyone is more or less at same understanding levels.
So any more discussion is almost pointless ...

Third question will be that if there is an artificial reduction in diesel prices - dictated by the Govt - why should the diesel SUV owners enjoy that reduced diesel price?

Is the govt policy of giving reduction in diesel meant to benefit the Diesel SUVs?
Or is it for some other purpose and the Diesel SUV owners are just getting benefit not intended for them?

Is the poll and debate really that controversial, that it warrants 15 pages (and still going on)?