Slapping cess

How you should react if the government increases taxes to subsidise petrol

Over at Barbad Katte, Ramesh makes a startling call:

Here is a possible response to the Petroleum Minister’s proposal to levy a cess on income tax payers in lieu of a hike in the price of fuel. Get hold of your neighbourhood Congress man and give him one tight slap. [Barbad Katte]

No, no, it’s not a partisan thing. Go read his post to understand why.

Now, this blog deplores the use violence to make political points (and this has to be said, because there are always some irony-deficient, metaphor-deaf people). Instead, it recommends that taxpayers to line up in large numbers and vote against the simians making economic policy.

9 thoughts on “Slapping cess”

  1. What is the alternative? Either way; whether it is substantial hike in petrol prices or cess, it is ultimately going to hurt the taxpayers. The simians are victim of circumstances and that too at the wrong time. Oil prices/ inflation are flaring up globally.

  2. The Left Front has proposed tacking on a windfall tax to private oil companies in order to subsidize oil prices and “help” the poor. It will only make things worse.

  3. MoF denied that imposing Petrol Cess is in their cards.

    They can deregulate the petrol price and regulate diesel price. Any hands for this ?

  4. I find talks about global oil prices in India to be distractionary when the bulk of the “cost” is the tax levied by the government. So the government levies more a 10000 percent tax, and then says hey I’m subsidizing this taxed price, that’s so much bullshit my ears get red. Both diesel and petrol/gasoline are *much* cheaper in the US, and that is after the US levies its own gasoline tax, enough to take care of all its road infrastructure construction/maintenance, which is orders of magnitude better than India anyway.

  5. There is already a ‘windfall’ tax on the public sector oil companies. The government has prevented them from benefiting from the global oil prices by paying them much below par for its purchases.
    If the government does indeed subsidize petrol/diesel through a tax, sales tax might be a good way to do it. That way those who benefit from the huge kerosene subsidy will also end up paying for some of the petrol/diesel costs and may be considered more equitable.

  6. Veeru,
    There is a difference between raising the price of petrol and taxing the income of people to offset the price increase. I do not own a car, I use the public transport (Mumbai local trains). Why should I pay a tax from my hard-earned income for someone who wants to use his fuel-inefficient car rather than use the train or any other public transport mode?

    How does keeping petrol / diesel / LPG prices lower benefit the poor? Do they use petrol / diesel ever? Do they use LPG ever? To say that the prices of essential commodities will rise if diesel prices are raised is also not completely true. transporters would then shift to a different mode of transport (railways). Anyways, the prices of essential commodities (perishables like fruit, vegetables and meat only) may rise at max 10 to 20%, not more, that too, only in cities, where they are not grown. The poor in the cities anywas have a shopping basket comprising minimal quantities of fruit and veggies. Their baskets typically have cereals and pulses, which will not be affected by a slower mode of transport like the railways.

    Petrol in the US today costs ~4 dollars a gallon (slightly more than Rs 40 per litre). A primary reason for this is because the US does not import 90% of its oil as India does. In 2005, for example, the US imported 60% of its oil and drilled the remaining 40% at home. Alaska, Texas, Loisiana, etc. have a lot of oil fields which meet 40% of the total requirements and 50% of the imported oil in the US comes from the Americas (Canada, Mexico, Venezuela, Equador, Columbia).
    Also, India does not import all its oil as crude and refine at home. We also import petrol / diesel / LPG directly, that causes the prices to rise further.

    The bottom line in my opinion is : If you want to drive your car, pay up for the petrol you consume, do not take my income to pay for it.
    If you use LPG, pay up for it, do not ask me for more tax

  7. If the government does indeed subsidize petrol/diesel through a tax

    Cupid, the government is not subsidizing petrol/diesel, and is not “struggling” to keep the price affordable against the onslaught of global crude oil prices.

    Such a narrative is nice for a populist government, but the reality is that the Indian govt taxes the hell out of petrol and diesel. There are multiple layers of tax; and after all those layers which add on *more than 100% of the cost post refining* (I’m not kidding, more than half the price you pay at the pump goes into taxes) the government then says I’m going to give a subsidy to diesel, or hey, the global prices are increasing, look I’m keeping price controls to benefit the consumer: it is hoodwinking the public.

    here is a link from the comrades themselves:

  8. A primary reason for this is because the US does not import 90% of its oil as India does.

    that again is a misconception much favored by the Indian government. Oil in the US is procured and sold by private companies. The price is determined by the global crude oil prices. If the companies pump more from oilfields in the US, the global oil prices would decrease.

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