Components of Petrol Price-Burdening Taxes

Dear Readers,
Government of India deregulated the Petrol and diesel prices by hiking the prices on 25.06.2010. Retail Petrol Price comprise of 8 components Let me analyse Petrol price at Vijayawada after hiking on 25.06.2010

Basic Price.................... ...Rs 23.00
Central Excise Duty..........Rs 14.35 (Central Govt Tax fixed in Budget)
Education cess................. Rs 00.43 (Central Govt Tax- 3% on Rs 14.35)
Crude oil Customs Duty... Rs 01.15 (Central Govt Tax- 5% on Basic Price)
Custums Duty on Petrol... Rs 01.73 (Central Govt Tax- 7.5% on Basic Price)
VAT............................  .. .. Rs 07.59 (A.P State Govt Tax- 33% on Basic Price)
Dealer Commission ....  .. ..Rs 01.05
Trasportation Charges .... ..Rs 07.03
Total...........................    ......Rs 56.33

Value Added Tax (VAT), and Transportation Charges vary from State to state So we see different prices in different places in the Country. Here what we have to observe is that the Cetral Government is collecting taxes Rs 17.66 (76.78% on Basic Price) on 1 ltr petrole while Andhra Pradesh State Government is collecting Rs 7.59 ( 33% on Basic Price) with a total of Rs 25.25 ( 109.78% on Basic Price). Actual Petrole Cost is Rs 23.00, Taxes on it are Rs 25.25. So, Petrole Prices are becoming burden to people not beacuse of increase in Crud oil Prices but because of these huge taxes only.

Subsidies - A myth
In Real terms Government is not giving subsidy to the people on petroleum products. The Central Government collected in the form of Taxes of Rs 58,789Crs in 2002-2003, Rs 62,875Crs in 2003-2004, Rs 70,051Crs in 2004-2005, Rs 76,085Crs in 2005-2006, Rs 85,839Crs in 2006-2007, Rs 96,486 Crs in 2007-2008 ,Rs 84,298 Crs in 2008-2009, Rs 71,768Crs in 2009-10(as per written statement made by Namo Narayan Meena state minister for finance in Rajyasabha on 03.08.10) and Rs 1,20,000 Crs in 2010-2011(Budget Estimates)on petroleum products only. At the same time,the Government allotted to the petroleum Sector including subsidies Rs 57,535 Crs in 2008-2009, Rs 58,120 Crs in 2009-10( out of wich only Rs 28,789 crs towards Subsidies) , and Rs 69,495 Crs in 2010-2011. Out of huge amounts collected in the form of taxes on petroleum products from people,small amounts are given as subsidies. So it is wrong that the Government is subsiding more and the oil companies are getting losses due to these subsidies. Subsidies are declared by the Government. So Government is bound to repay the amount of subsidies to the oil companies, Unfortunately the Government is collecting taxes and is not paying the subsidy amounts to oil companies. Despite all these things, Public Sector Oil companies are getting profits, For example in 2008-2009, IOC got the net profit of Rs 2,950 Crs. In 2009-10, it got Rs 10,998 Crs and the total of its reserves Rs 49,472 Crs. These are Audited figures. The other oil companies HPC, BPC are in same line of Profits. So the propaganda that the oil companies are getting losses is false.
Now the Government is talking of under recoveries. it is advocated that due to these subsidies, public sector oil companies are making under recoveries. Under recovery does not mean that they are making losses. Under recovery means the difference of income between the amount assumed profit and acutal profit. Assumed profit means the profit they could earn if all the subsidies were removed and deregulated. So it ie evident that under recovery is not loss. The Government has taken this move to abolish the subsidies to the people in the name of losses/under recoveries. So that, the Private oil companies Like Reliance, Essar can freely market their products, so to say they can freely rob the people.
Let us awake. Let us join our hands to fight till the the removal of the taxes are achieved.

M.V.Anjaneyulu
Secretary,
Tax Payers' Association
Vijayawada
email: veeranjaneyulumatcha@gmail.com