Thread by @jamewils

Another excise duty hike in fuel, pick pocketing people in the time of #COVID19

Union Govt increased Special Additional Excise duty of diesel from Rs.2 to Rs.4 and for petrol from Rs.8 Rs.10/-.

While Road & Infrastructure Cess for both increased from Rs.9 to Rs.10/-

#thread

First of all understand that we shifted from ad valorem taxes to specific taxes in 2008 as per the recommendations of Rangarajan Committee.

This shift was done then because as valorem (percentage) tax fluctuate wrt oil prices while specific (per unit) did not fluctuate!

While Union Excise is now in specific rate regime, State Government still follows VAT, an ad valorem tax.

So Union Government did not lose tax revenue when crude prices fall, while State Government's revenue falls as it is a percentage tax but they gain when it increases!

Union Excise duty is having 3 components:

i. Basic Excise Duty
ii. Special Additional Excise Duty
iii. Road & Infrastructure Cess

Though Excise duty is in the divisible pool to share with the States (41%), understand that only BASIC EXCISE DUTY is fall under divisible pool.

So let us see how it is after present hike

PETROL

BE - Rs. 2.98
SAED - Rs. 10.00
R&I Cess - Rs. 10.00
Total- Rs. 22.98

DIESEL
BE - Rs. 4.83
SAED - Rs. 4.00
R&I Cess - Rs. 10.00
Total - Rs.18.83

In case of Petrol, the share to States to the divisible pool is out of Rs.22.98 is just Rs.1.22,
ie just 5.3%!

In case of Diesel, out of Rs. 18.83 it is Rs 1.98,
ie, 10.52%!

Modi Govt continuously increased components of excise, which need not share with States, denied share!

Let's see what was the excise on Petrol & Diesel when Modi taken over from UPA-2

The last hike before May 2014 was in 14/09/2012

Petrol then Rs.9.48, now it is Rs 22.98/-, a hike of 142%

Diesel then Rs.3.56, now it is Rs.18.83, a hike of 429%

When Modi taken over from UPA-2

Petrol
Out of total excise duty of Rs. 9.48, BED was Rs.6.35, the component shared with States, and other two together was Rs.3.13.

Diesel
No BED while the other two was Rs. 3.56/- in total Rs.3.56/-

UPA times Union Government has to shed around Rs. 1.5 lakh crores as fuel subsidy as diesel was fully regulated only on 19.10.2014!

Now the excise duty is one of the biggest tax generator of Union.

From Rs. 77982 crores in 2013-14 to Rs. 2,77,065 crores in this year budget!

Union Government who has given big direct tax cuts to the Corporates has no hesitation to pick pocket the people in the times of the pandemic #COVID19

Union is not even ready to share it with States & force States to hike their VAT on fuels!

15th FC anticipated a share of Rs.8.55 lakh crores to States from the divisible pool, Union budget allocated only 7.84 lakh crores!

Also 15th FC recommended Rs. 74,340 crores as revenue deficit grant anticipating Rs.8.55 LC to States, but budget allocation was Rs 30,000 crores!

Fall in oil prices will reduce the anticipated tax revenue from fuel as far as the States are concerned.

This along with crippling of economy due to Modi's crazy experiments, global melt down plus #COVID19 effects will force States also hike fuel taxes.

READY TO PAY MORE TAX!

PS: When oil prices will increase, neither Union nor States will be ready to pass on the benefits to us, by reduction of hefty taxes raised when global oil prices low.

But corporates get tax cuts at times of revenue fall.

A Government for Corporates by Corporates, by all means

Here is the single link for the above #thread

threadreaderapp.com/thread/1238691…