Sharon Furtado and her three friends who work with media firms in Parel, car-pool every day from Borivali to their workplaces. Saturday’s hike in petrol prices+ will add at least Rs 120 to each one’s monthly travel bill. But what has upset Sharon the most is a little-known detail: they are now paying 153% in taxes over the per litre price at which petrol is sold by refineries to oil companies.
Given today’s crude price and dollar-rupee exchange rates, the cost of petrol supplied by oil companies inclusive of their marketing charges is Rs 29.54 per litre (see graphic). But in Mumbai, consumers end up paying Rs.77.50 per litre owing to a raft of duties and cess. Consumers here pay Rs 47.96 per litre in taxes and duties over and above the price at which it lands in the market. These levies include central excise duty, state VAT, octroi, cess and commission for petrol pump owners, translating into 153 % in taxes.
A senior economist working closely with the government, on condition of anonymity, admitted that government was trying to boost its revenues by hiking the cess on petrol. At a time when its debt level has crossed a virtually unsustainable Rs 4.13 lakh crore, it has reached a stage in which it cannot afford to increase borrowings to fund additional expenditure. Extra duties and cess on goods within its ambit (GST will soon reduce its elbow room) may be the only option.
Transport expert Ashok Datar went so far as to say that a hike in petrol prices may even be a welcome step as it will discourage use of private vehicles and decongest the city’s roads.