Petrol price hike: “no petrol” or “just taxes”

Compare the petrol prices among the countries? You will find it on most of higher side in India. When petrol regulatory body are asked about the reason, they said “Higher taxes”, which makes petrol prices four times the actual price. Four times!! Are they kidding?  Unfortunately, No :(

Dunno whom, we should blame. The people, for not giving a serious thought, while wasting petrol and giving raise to “no petrol zone” or people’s government, for taxing them so heavily? Rather instead of blaming, we both government and people should try to work out together, to fix the real cause of petrol hike.

Petrol price in India comprises of following components:

Base price

Excise Duty – Fixed

Dealer commission- Fixed

State tax/VAT – 20 to 34%

Education tax- Fixed

Crude oil Custom duty

Petrol custom duty

Transportation charges

 

Based on the attached calculation the price of crude is only around 36-40% (based on how you calculate) of the total price that we pay at the pumps. There are way too many levels where we are taxing this needs to be simplified. Secondly there is lot of fixed price components in this. This needs to be changed to variable component as a % of crude or petrol cost so that it can vary relative to crude price. The current fixed pricing structure is beneficial for Govt whereby irrespective of crude price changes Govt get fixed revenue(easy for budgeting). At higher crude prices the overhead is reasonable/comparable to global standards however at lower crude prices the overhead is really high.
(Courtesy : http://shogun1947.blogspot.com/2008/12/why-is-petrol-price-high-in-india.html)