Middle class bears brunt of petrol tax

Hyderabad: Despite the widespread condemnation of the high price of fuel, the daily increase in fuel prices continues, inviting the wrath of the middle class over government milking them for subsidising other sections of society.

“It is said that we are paying higher price for petrol and diesel due to higher taxes. I would like to ask what we are paying these taxes for. What is that common man in the middle class getting? Government representatives say these taxes are important for welfare spending. But why should middle class and salaried class bear the brunt, while the rich get tax exemptions? Let the government levy additional taxes from the 1 per cent rich, which hold 70 per cent of the country’s wealth,” said Krishna Mohan, a software professional from the city.

On Thursday, oil marketing companies increased the price of petrol by Rs 30 paise and diesel by Rs 24 paise, making the price of these two essential commodities hit Rs 86.28 and Rs 79.82 respectively.

Oil companies have increased the price of petrol by Rs 11.70 in the last one year. Most of this increase Rs 9.50 has come in the last six months as global crude oil prices headed north due to demand-supply mismatch.  

The price of diesel, which will impact the price of everyday goods and commodities, has increased by Rs 15.93 in the last one year and Rs 11.46 in the last six months.

The increase in petrol and diesel prices over the last one year roughly matches the additional excise duty  Rs 11.77 on petrol and Rs 13.57 on diesel that the BJP government levied in nine instalments from November 11, 2014 to January 30, 2016.

The government collects over Rs 2.5 lakh crore through excise duty alone. Out of this, Rs 1,60,000 crore is collected as additional levy by the Central government. Apart from this, states levy VAT on a price that includes excise duty. This money, government representatives claim, is crucial for funding welfare schemes for farmers and poor sections of society and bankrolling other projects.

Vamsi Krishna, a school teacher, objects to government milking the salaried class. “We already pay 20-30 per cent on our income. On the rest 80-70 per cent income, we pay 12-18 per cent tax on the goods that we buy. After paying 35-45 per cent in direct and indirect taxes, we have to foot the bill for everything ourselves. The government neither helps us with schooling for our children nor social security in our old age.”

Speaking to this newspaper, P. Venkatramaiah, general secretary of the Bank Employees Federation of India, accused the government of filling its coffers unmindful of its impact on the common man.

“India needs progressive taxation because the number of people in the 30 per cent tax bracket is less. The common man is unable to save any money as every penny is being spent on basic amenities. If the crude oil price has come down, fuel prices should have been at least kept the same instead of increasing it.”

According to Rakesh Reddy Dubbudu, the founder of an independent information portal called Factly, the Central government has benefited more than states from higher taxes on petrol and diesel. “The Central government's revenue from excise duty on petrol and diesel has more than tripled between 2013-14 and 2017-18.” 

He, however, said that the revenue of state governments from VAT or sales tax on petrol and diesel has remained more or less constant at around 17 per cent in the last four years.

Congress spokesperson Dr Sravan Dasoju said, “In all, the Modi government has effected an increase in excise duty on petrol and diesel on 12 occasions since 2014.

During this period, the government hit a jackpot as revenue from petroleum products increased from Rs 3.32 lakh crore in 2014-15 to Rs 5.24 lakh crore in 2016-17.

On the other hand, the taxes collectively levied by the Centre and states have resulted in fuel prices going back to where it stood in 2014 despite crude oil becoming cheaper by almost half. Globally, the currency value coupled with the international crude oil prices make up for the primary factors that go into the calculation of local retail fuel prices.

“India stands among the countries where the government charges highest prices for fuel.”