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Carmakers write to govt against additional tax on diesel cars
Posted on 19 Jun 20122,680 Views Comments
The battle for bridging the gap between petrol and diesel prices is still on. Reducing the price gap a more popular option rather than hiking taxes on diesel vehicles.
Carmakers have strongly opposed any additional tax on diesel vehicles in a representation to the finance ministry, saying it will slow down sales and create "serious distortions" within the industry.
In a letter to finance secretary RS Gujral, industry lobby group Society of Indian Automobile Manufacturers (Siam) has said the car market is already in the grip of a slowdown and any additional tax will further retard demand.
"Increase in excise duty on diesel cars would not serve any useful purpose in terms of reducing the subsidy bill of government. On the other hand, it would create serious distortions in the industry taxation structure and provide a disincentive to the highly fuel-efficient diesel technologies developed by the industry with huge investments," Siam director-general Vishnu Mathur said in a letter to Gujral.
Siam's response to the Government comes after a meeting that leading automakers had with Gujral earlier this month on the issue. The Petroleum Ministry has made a strong pitch for imposing an extra tax on diesel cars to make up for the subsidy that their buyers get on account of diesel's regulated pricing. The Finance Ministry had earlier said that it is looking into the matter.
Siam claimed that diesel usage by passenger vehicles is about 6.8% of which only about 1.56% is for personal vehicles while the rest goes for taxis. Personal passenger car owners are "miniscule" and insignificant in the entire diesel usage, Siam said, adding that other industries were bigger consumers of the subsidised fuel.
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