Guzzler tax drives in
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13/06/2008
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Telegraph (Kolkata)
India has introduced a fuel-guzzler tax, making heavyweights of the road heavier on your pocket. Big cars will cost Rs 15,000-20,000 more with the Centre slapping an additional excise duty in what officials claimed was an attempt to discourage fuel consumption and emission. The levy, which will help the government mop up extra revenue, drew howls of protest from the automotive industry. However, the green lobby, which had been advocating a discriminatory tax on big vehicles, welcomed the step. For cars, multi-utility vehicles (MUVs) and sports utility vehicles (SUVs) of 1500cc to 1999cc engine capacity, a specific duty of Rs 15,000 a unit has been imposed. The duty will be Rs 20,000 a unit on those with a capacity of 2000cc and above. (See chart) The specific excise duty, which would be in addition to the existing ad valorem duty of 24 per cent, will come into force with immediate effect, an official release said. The tax will be levied on vehicles manufactured or assembled in India, officials said later. The duty structure for cars with an engine capacity up to 1500cc would remain unchanged. This means Honda City (1497cc), Hyundai Accent GLE (1495cc), Hyundai Verna diesel (1493cc), Mahindra Renault Logan diesel (1461cc) and Mitsubishi Lancer petrol (1468cc) have had a close shave. The decision on the additional levy comes on the heels of the government raising the price of petrol, diesel and cooking gas in the face of a ballooning crude oil bill. The duty also coincided with the announcement that rising food and vegetable prices have pushed inflation to a seven-year high of 8.75 per cent. The auto industry, struggling to cope with rising steel and plastic prices and high interest rates, "vehemently' opposed the levy and requested the government to "immediately withdraw this unwarranted hike'. Ronojoy Mukherjee, an auto analyst and a spokesperson for the Society of Indian Automobile Manufacturers (Siam), said: "In the current situation of economic difficulties and spiralling inflation, the auto industry feels it is inappropriate for the government to increase the price of vehicles, especially since the industry is going through a downturn.' But Anumita Roychoudhary, associate director of the Centre for Science and Environment (CSE), said: "This sends a very good signal. We have, for some time now, been asking for the excise structure to be designed in a manner so that small cars benefit over big gas-guzzlers. This is essential at a time when the country faces an energy emergency.' A study by the CSE had said that cars in India made after 2005 were less fuel-efficient. Oil industry officials, too, had been urging the government to take steps to discourage large vehicles, especially diesel-run, to ensure that the fuel subsidy does not serve the affluent. The demand for diesel had risen by about 25 per cent in the recent past. The finance ministry feels that as diesel is highly subsidised to keep public transport, trucking and farm costs low, it is "morally' wrong to allow it to be the fuel of choice for top-end SUVs and MUVs. Diesel is now subsidised to the extent of Rs 28.58 a litre, compared to Rs 16.34 for a litre of petrol. Many MUVs and SUVs sold in the country are diesel variants, though petrol versions are also available.