Thursday, September 22, 2011

Why Multiple Taxation on Petroleum Products in Bad ?

Recently, I read a study on petrol prices in India as compared to other nations of world. This study compared petrol prices across the world as per the purchasing power of people. Surprisingly, this study revealed that petrol prices are very high in India as compared to most of nations. As per study, petrol prices in India are much higher than many developed nations like USA.

In many developed nations where people have more purchasing power than Indians, petrol prices are in the range of Rs 35 to 45. Only few Europeans nations have higher petrol prices than India though people living in these countries have higher purchasing power thus it doesn’t effect them much. In many nations around India, petrol prices are in the range of Rs 35 to Rs 45. Why this difference in petrol prices? Why petrol prices are constantly increasing? Why there is two to three times difference in prices of crude oil purchased and final petroleum products.

The main reason behind higher prices of petrol in India is multiple taxation on oil products. Government and state governments put tax at every level of petrol production thus increasing prices of final petroleum products to very high level. When government import crude oil then it imposes tax on it; when oil enters an oil refinery and comes out of refinery then again tax is imposed on it. When oil is transported from state of another state again tax is imposed.

In India, direct and indirect taxes on petroleum products are very high as compared to other nations of world including developed nations. A crude oil purchased for Rs 25 to Rs 30 become final petrol in the range of Rs 65 to Rs 75. It is very easy for government to reduce prices of petrol by decreasing taxes on petrol or implementing a single tax policy. Due to non awareness common people of India do not raise their voice and believe government statements of excessive burdens on oil companies.

Both governments and oil companies are making billions of rupees through present system of multiple taxation while common people are bleeding. Time has come when we should make accountable our government and ask it to take necessary action for the welfare of common people. Petrol price increase mainly hurt common people who drive scooter, motorcycles and petrol cars like 800.

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