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Taxes fuel petrol, diesel prices globally
May, 31st 2008

This could make the Left bastion see red. Even as pressure mounts on the finance ministry to slash duties on petroleum products, a comparable study with other economies shows the countrys duty rates may not be an aberration. In fact, retail consumers in the country are paying similar duty rates on the fuel prices as their counterparts in other countries.

So, while the hullabaloo over high oil prices does makes sense, the aggressive arguments put forth by various quarters to cut high duties on petro products does not hold water, analysts say.

A look at the global averages of tax component in petrol prices reveal that in India, the tax component at 52%, though higher than 18.6% of US, is much lower than in Spain, Italy, Germany or France. The average of the sample size of nine countries is 53%. US has always been an exception when it comes to taxing fuel. However, oilproducing companies have to pay higher taxes. Oil-rich states such as Texas have special taxes.

In the case of US, it may be pointed that a large part of countrys revenues come from direct taxes. In India, only 3% of the population pays income tax. So, historically, the governments dependence for revenue generation has been more on indirect taxes. For the first time in 2007-08 , direct tax collections surpassed the indirect tax collections.

Today, a litre of petrol costs Rs 43.56 in Delhi. The excise duty component is Rs 14.35 per litre while state sales tax is 20%. The Customs duty component of 5% on crude is also built in. States also levy entry tax and octroi on movement of crude which is passed on to consumers.

However, diesel consumers are luckier than their petrol counterparts . The average for the nine countries taken for comparison is 45%. India has lower taxes of 30% on diesel, and the tax component is also lower than other countries.

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