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Sunday, February 20, 2011

Rethink taxes on Fuel

As the fuel prices are soaring new highs everyday, people are now feeling the heat of inflation. Consecutively two price hikes in fuel prices mars the common man’s budget already. As the opposition parties are not cross checking the government policies, now people are coming forward and asking why policies differ for different states.


Every time petrol prices go up, both Central and State governments' tax kitties get a boost. While it’s win-win situation for the companies and the governments, the consumer remains a perennial loser.

Asking about the petrol economy, many petrol pump owners and dealers pitched high against the heavy tax structure.



Nitin Kankariya, Owner of Kankariya Service Station

Pune Municipal Corporation should control octroy rates because it directly related to the prices of Petrol and Diesel. The existing octroy is 2%. If PMC make it 1%, the total cost of the petrol comes down by at least 60 to 65 paise. It will be relief to the people. Also Central government and State government should revise the existing tax structure. When one gets petrol at the base rate of Rs 28.95 per litre. Then 110 % of different types of taxes like excise, custom, octroy, adds into the base price. Now petrol in Pune cost around Rs 63.47 and Diesel costs Rs. 42. If PMC rethink its octroy policy, the consumers will be benefited.



Ashok Dixit,

President, Federation of All Maharashtra Petrol Dealers Association,

Heavy tax structure mars the petrol and Diesel prices. In fact, fuel prices are not controlled by economy but they are controlled by politicians. If PMC, Central government and State government will lower the heavy taxes on Petrol, Diesel, it will give relief to the consumers. As it is directly related with inflation, it will also help to reduce inflation rate. There should be uniformity in the tax structure. If government decides petrol or Diesel price on barrel price of that day, then the government should attach tax rate to the barrel price.

According to Dixit, bringing sales tax to a uniform level all over the country is the only solution. “It can not be abolished, but it can be reduced. State can levy an uniform sales tax but for that a greater co-ordination and consensus is required. States are not willing to do away with their revenue. Therefore it is unlikely that this will come into reality unless Centre puts a pressure on them to do it. Looking at the current situation we are in, that is the thing most needed,” he added.

Hemant Nikam, Octroi Chief, Pune Municipal Corporation

Pune Municipal Corporation apply 2 % octroy on Petrol and Diesel. This is the lowest octroy we charge for these products. Octroy on these products becomes 2% from 4% in 2008.



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