Tiger80 Posted November 7, 2011 Share Posted November 7, 2011 http://www.hindustantimes.com/News-Feed/India/Government-the-biggest-gainer-from-petrol-price-hikes/Article1-766147.aspx ItÃÔ cheaper to tank up cars in Washington, New York, Karachi, Dhaka, Beijing and Colombo, among many other cities, than in Delhi and for a very good reason. About 40% of what you pay for petrol goes to the government as taxes and duties. suggest that half the excise duty collection in the country is from petroleum products. In 2011-12, therefore, the Centre expects to earn about Rs 82,000 crore as excise duty from petroleum products. A Rs 1 cut in excise duty on petrol results in a revenue loss of about Rs 4,000 crore or 10% of the outlay for the rural employment guarantee scheme and reduces its ability to spend on welfare schemes and other heads. Then, coupled with the governmentÃÔ inability to keep its expenditure under control, there are massive leakages in direct and indirect tax collections and complete exemption of agricultural income from taxes. This explains the governmentÃÔ unwillingness to cut taxes on petroleum products. Ÿhy is the government reluctant to cut taxes and duties on petroleum products? asked Jayati Ghosh, professor of economics at Jawaharlal Nehru University. ŵhe government is extracting revenues from the weaker sections of society by taxes on petroleum products. This amounts to profiteering on part of the government. Lower revenues would also widen the fiscal deficitÃÃudgeted at 4.6% of GDP or Rs 4,65,000 crore this year forcing the government to borrow more from the market to fund its current expenditure. The economics of auto fuel retailing in India works out somewhat like this: The average price of crude purchased by India is at $ 110 (Rs 5,280) a barrel this year. Each barrel contains about 159 litres, implying crude oil costs Rs 33 per litre. Add to this the cost of refining and other costs incurred by oil companies the effective price of petrol at oil depots works out to Rs 41 a litre. Ūn India, we have low taxes on diesel, kerosene and LPG because these directly affect the weaker sections of society. Moreover, diesel is used for transportation and the Railways as well, RS Butola, chairman and managing director of Indian Oil Corporation, told HT. Link to comment Share on other sites More sharing options...
gaurav92 Posted November 7, 2011 Share Posted November 7, 2011 Firstly, the government imposes heavy taxes on Oil and petrol and on the other hand, they provide subsidies to the oil companies to cover for their losses. WTF is this ? The fact of the matter is that it results in price hike. Its better not to tax them and pay subsidies so that the consumer doesn't have to pay more out of his pocket. Lame rule to be honest. Its like charging tax and providing revenue to pay the tax at the same time which is illogical. Its consumers who has to suffer, and a rise in petrol, diesel costs creates hike in almost all consumer goods, food items that are transported to different areas. Plus of course, the increasing prices of LPG :(( Link to comment Share on other sites More sharing options...
Mariyam Posted November 7, 2011 Share Posted November 7, 2011 Thanks for sharing this article. Interesting read. The economics of auto fuel retailing in India works out somewhat like this: The average price of crude purchased by India is at $ 110 (Rs 5,280) a barrel this year. Each barrel contains about 159 litres, implying crude oil costs Rs 33 per litre. Add to this the cost of refining and other costs incurred by oil companies the effective price of petrol at oil depots works out to Rs 41 a litre. The excise duty (Central Govt.) on petrol is given as 15 Rs. Rs15/Rs 41 = 36.5% . That is an abnormally high rate. Excise duty on goods is generally till 15%. Only a few products, like cars, tyres,soft drinks, Air conditioners and pan masala/ ghutka etc have higher excise duty. And that is also around 30%. Such high excise rates, I'm hearing for the first time. Govt is milking us big time. :(( Link to comment Share on other sites More sharing options...
surajmal Posted November 7, 2011 Share Posted November 7, 2011 there is so much tax evasion in this country that high taxes on an essential item like petrol is necessary (since almost everyone uses it). Don't blame the government. blame the people. Link to comment Share on other sites More sharing options...
gaurav92 Posted November 7, 2011 Share Posted November 7, 2011 there is so much tax evasion in this country that high taxes on an essential item like petrol is necessary (since almost everyone uses it). Don't blame the government. blame the people. Petrol an essential item :hysterical::hysterical::hysterical::hysterical::hysterical::hysterical::hysterical::hysterical::hysterical::hysterical::hysterical::hysterical::hysterical: Link to comment Share on other sites More sharing options...
Tiger80 Posted November 7, 2011 Author Share Posted November 7, 2011 there is so much tax evasion in this country that high taxes on an essential item like petrol is necessary (since almost everyone uses it). Don't blame the government. blame the people. So Pakis, Bangladeshi's and Lankans are very honest that's why they get petrol cheaply :banghead: Link to comment Share on other sites More sharing options...
Mariyam Posted November 7, 2011 Share Posted November 7, 2011 there is so much tax evasion in this country that high taxes on an essential item like petrol is necessary (since almost everyone uses it). Don't blame the government. blame the people. Not denying what you say. But in India tax(central + state) to GDP is ~ 20%. From that Income Tax accounts only for a meagre 2-3%. So increasing Excise isn't really in lieu of the evaded income tax. Its very disproportional to the loss by non payment of income tax. And since when did we start levying punitive taxes? :P The revenues from Income Tax and those from the Excise Dept. are used for different purposes. The Excise Duty is supposed ( according to the planning commission) to provide the Govt. money for the improvement of the economy, fund new industrial ventures, fund certain govt. approved SMEs etc. If the govt. can't collect Income Tax, the right thing to do is to strengthen the dragnet, not increase the Excise. Link to comment Share on other sites More sharing options...
surajmal Posted November 7, 2011 Share Posted November 7, 2011 Petrol an essential item :hysterical::hysterical::hysterical::hysterical::hysterical::hysterical::hysterical::hysterical::hysterical::hysterical::hysterical::hysterical::hysterical: do i even have to respond... Link to comment Share on other sites More sharing options...
surajmal Posted November 7, 2011 Share Posted November 7, 2011 So Pakis, Bangladeshi's and Lankans are very honest that's why they get petrol cheaply :banghead: who gives a **** about the pakis, and the other horsecrap. Fiscal responsibility is extremely important. Even though I hate to death, all the crummy schemes that this government has been running; atleast, they realize, borrowing and spending isn't the way to go. Link to comment Share on other sites More sharing options...
gaurav92 Posted November 7, 2011 Share Posted November 7, 2011 do i even have to respond... Your wish :--D But FYI petrol is not an essential item in India. An item comes under the essential category once it is consumed by at least 50% of the country. And petrol my dear friend, is not consumed by more than 8-10% people in the country. Check the stats before drawing conclusions Link to comment Share on other sites More sharing options...
achilles Posted November 7, 2011 Share Posted November 7, 2011 [Cong mode on] But but decentralization has led to government not having anything to do with the price rise ! [/off] Link to comment Share on other sites More sharing options...
surajmal Posted November 7, 2011 Share Posted November 7, 2011 Not denying what you say. But in India tax(central + state) to GDP is ~ 20%. From that Income Tax accounts only for a meagre 2-3%. So increasing Excise isn't really in lieu of the evaded income tax. Its very disproportional to the loss by non payment of income tax. And since when did we start levying punitive taxes? :P The revenues from Income Tax and those from the Excise Dept. are used for different purposes. The Excise Duty is supposed ( according to the planning commission) to provide the Govt. money for the improvement of the economy, fund new industrial ventures, fund certain govt. approved SMEs etc. If the govt. can't collect Income Tax, the right thing to do is to strengthen the dragnet, not increase the Excise. 1 there ought to be punitive taxes. Has any government since independence ran a fiscal surplus? There may be separation between Income Tax and Excise Taxes but at the end of the day it is still one big pot. 2 In the end, just a technicality. 4 Different Issue. Problem is a corrupt and hence an inefficient system. Link to comment Share on other sites More sharing options...
surajmal Posted November 7, 2011 Share Posted November 7, 2011 Your wish :--D But FYI petrol is not an essential item in India. An item comes under the essential category once it is consumed by at least 50% of the country. And petrol my dear friend, is not consumed by more than 8-10% people in the country. Check the stats before drawing conclusions I'm not gonna get into semantics here. Petrol is essential for those who are an integral part of this country's economy. Link to comment Share on other sites More sharing options...
Tiger80 Posted November 7, 2011 Author Share Posted November 7, 2011 who gives a **** about the pakis' date=' and the other horsecrap. Fiscal responsibility is extremely important. Even though I hate to death, all the crummy schemes that this government has been running; atleast, they realize, borrowing and spending isn't the way to go.[/quote'] You have to compare items available in your neighbouring countries and your country.If we brag about India's growth then quality of life of people should improve rather hearing just songs of Bharat Nirman.By increasing petrol prices again and again You are only benefitting Diesel Car makers and CNG kit fitment centers.Rich people will switch to Diesel and where CNG is available they switch into it so who is left,two wheeler owners now do you think Taxing TWO wheeler owners is fair policy? Link to comment Share on other sites More sharing options...
akshayxyz Posted November 7, 2011 Share Posted November 7, 2011 Petrol an essential item :hysterical::hysterical::hysterical::hysterical::hysterical::hysterical::hysterical::hysterical::hysterical::hysterical::hysterical::hysterical::hysterical: I do not see anything funny about it.. Link to comment Share on other sites More sharing options...
akshayxyz Posted November 7, 2011 Share Posted November 7, 2011 there is so much tax evasion in this country that high taxes on an essential item like petrol is necessary (since almost everyone uses it). Don't blame the government. blame the people. I have heard from some small-business people - almost directly from the horses mouth - that in many places tax evasion by small businesses is encouraged by the auditors, as that is their key source of under-the-table income. Link to comment Share on other sites More sharing options...
Tiger80 Posted November 7, 2011 Author Share Posted November 7, 2011 Your wish :--D But FYI petrol is not an essential item in India. An item comes under the essential category once it is consumed by at least 50% of the country. And petrol my dear friend, is not consumed by more than 8-10% people in the country. Check the stats before drawing conclusions Petrol is essential in sense that the first thing a person's mind come to improve life is to purchase a two wheeler.Also Lot of people use two wheelers like horses as Two wheeler penetration is quite high compared to four wheelers and bring many commodities to market so increasing petrol prices also directly increase inflation Link to comment Share on other sites More sharing options...
achilles Posted November 7, 2011 Share Posted November 7, 2011 1 there ought to be punitive taxes. Has any government since independence ran a fiscal surplus? There may be separation between Income Tax and Excise Taxes but at the end of the day it is still one big pot. 2 In the end, just a technicality. 4 Different Issue. Problem is a corrupt and hence an inefficient system. Link to comment Share on other sites More sharing options...
akshayxyz Posted November 7, 2011 Share Posted November 7, 2011 I'm not gonna get into semantics here. Petrol is essential for those who are an integral part of this country's economy. @G92 - come on!! suraj is spot on here, almost every item you consume on daily basis has a cost component arising from some petroleum product - and mostly it is transportation cost. Link to comment Share on other sites More sharing options...
gaurav92 Posted November 7, 2011 Share Posted November 7, 2011 ^I am not denying the fact that increasing Petrol prices are not great signs for any economy and it leads to further inflationary rise in prices of other goods. I am saying that petrol in itself is not a "necessity". Of course, with increasing petrol, diesel prices, the transportation cost will increase thereby increasing the cost of essential commodities like milk, grains, vegetables, fruits etc. Link to comment Share on other sites More sharing options...
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