Taxes fuel petrol, diesel prices globally

[N.Sukumar]

NEW DELHI: This could make the Left bastion see red. Even as pressure
mounts on the finance ministry to slash duties on petroleum products,
a comparable study with other economies shows the country’s duty rates
may not be an aberration. In fact, retail consumers in the country are
paying similar duty rates on the fuel prices as their counterparts in
other countries.

So, while the hullabaloo over high oil prices does makes sense, the
aggressive arguments put forth by various quarters to cut high duties
on petro products does not hold water, analysts say.

A look at the global averages of tax component in petrol prices reveal
that in India, the tax component at 52%, though higher than 18.6% of
US, is much lower than in Spain, Italy, Germany or France. The average
of the sample size of nine countries is 53%. US has always been an
exception when it comes to taxing fuel. However, oilproducing
companies have to pay higher taxes. Oil-rich states such as Texas have
special taxes.

In the case of US, it may be pointed that a large part of country’s
revenues come from direct taxes. In India, only 3% of the population
pays income tax. So, historically, the government’s dependence for
revenue generation has been more on indirect taxes. For the first time
in 2007-08 , direct tax collections surpassed the indirect tax
collections.

Today, a litre of petrol costs Rs 43.56 in Delhi. The excise duty
component is Rs 14.35 per litre while state sales tax is 20%. The
Customs duty component of 5% on crude is also built in. States also
levy entry tax and octroi on movement of crude which is passed on to
consumers.

However, diesel consumers are luckier than their petrol counterparts .
The average for the nine countries taken for comparison is 45%. India
has lower taxes of 30% on diesel, and the tax component is also lower
than other countries.

N.Sukumar
Research Analyst