 ANUMITA ROYCHOWDHURY
Executive Director, Research and Advocacy, Centre for Science and Environment*
“The additional taxes on diesel cars can generate resources to produce clean diesel for all segments to meet public health objectives”
There is a new number game in town. To stave off the pressure to put high tax on diesel cars, the automobile industry is desperate to prove that cars use less than one per cent of the country’s diesel. It is out to kill any proposal to equalise the fuel tax burden on all cars — petrol and diesel. This number jugglery diverts attention from the enormous revenue and under-recovery losses from under-priced and under-taxed fuel used in cars.
With each litre of petrol replaced by diesel to run a car, the excise earnings drop seven times. These losses will compound with the increased share of diesel cars and sports utility vehicles (SUVs). The effect is so dramatic that the excise earnings from both diesel and petrol has nearly equalled. Petroleum Planning and Analysis Cell says the diesel consumption growth rate has outstripped that of petrol.
Industry’s clever ploy is to contrast diesel use in cars with other sectors of the economy. This hides the massive dieselisation of the car segment. Industry’s own estimates confirm that diesel is already 40 per cent of the total fuel used in the car and SUV segments. Diesel cars now account for over 40 per cent of total sales from four per cent in 2000; in popular models diesel car sales account for 50 per cent to 75 per cent. Despite the recession, diesel-car sales have jumped 34 per cent in 2010-11.
Diesel’s lure adds to revenue losses. Only from the diesel used by the new diesel cars sold in 2010-11, the Centre is estimated to have lost Rs 800 crore in fuel excise. From the on-road fleet the loss is staggering, close to Rs 3,000 crore. This loss will compound with high annual sales. Losses from other central and state taxes are not even accounted for.
At stake in this diesel gamble is our health. The media is already abuzz with spiralling cancer risks in Indian cities. Policies must reduce environmental risk factors that include toxic diesel emissions. The World Health Organisation, International Agency for Cancer Research, California Air Resources Board and US Environmental Protection Agency have branded diesel particulates as human carcinogens and implicated them for lung cancer that is also rising in our cities.
Diesel cars also have the legal license to emit more particulate matter and nitrogen oxides that are of special concern in cities. Other governments consider these risks before taking a decision. Should our policies trade ill-health for profits?
The car industry defends itself saying diesel cars are increasing in Europe. Mercedes Benz has lobbied against disincentive for diesel cars. But they hide the fact that Europe has moved to more advanced technologies and clean diesel with 10 ppm sulphur. Indian diesel is heavy with 350 ppm sulphur (50 ppm in few cities). India needs clean diesel too, not just for cars but also for its captive users, buses and trucks. But the auto industry has not been given any further target for improving emissions levels.
The additional taxes on diesel cars can generate resources to produce clean diesel for all segments to meet public health objectives.
Cheap diesel is also pushing the market towards bigger cars and SUVs that guzzle more fuel, and undermines fuel-efficiency advantages of small cars. High petrol prices have kept the bulk of the petrol car sales – as much as 87 per cent – below 1200 cc engine. But more than 40 per cent of diesel cars are above 1500 cc. Last year, the SUV segment registered a 41 per cent growth rate. This trend will explode.
Instead of playing this fallacious game of how little diesel cars use compared to power plants and industry, our government has to come clean on actual losses on account of use of diesel in cars vis-a-vis petrol cars and two-wheelers. And slap additional tax on diesel cars to equalise the tax burden for all personal vehicle usage and reduce public health risk.
Other governments have acted. Brazil has banned diesel cars as it taxes diesel low. In Denmark, diesel cars are taxed higher to offset the lower prices of the fuel. In China, taxes do not differentiate between petrol and diesel, while Sri Lanka uses taxation to discourage diesel cars and has reversed the dieselisation trend and diesel fuel consumption in its transport sector. The message is clear; profits must not get priority over our health.
*Also head of the Air Pollution and Clean Transportation Programme
READ WHAT NEERAJ GARG, MEMBER OF BOARD & DIRECTOR OF VW PASSENGER CARS HAS TO SAY ON PAGE 2>>
|
