Why is the government not passing on the benefits of lower crude oil price to the people?

Why is the government not passing on the benefits of lower crude oil price to the people?

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Why is the government not passing on the benefits of lower crude oil price to the people?

Question 1: Why has the price of petrol not come down with the fall in international crude price?

In the last 18 months, international crude price has come down 60%. But, the price of diesel has only come down by 17% and the price of petrol has only come down by 14%.

With the excise duty being hiked 5 times in a year, the taxes and duties have actually exceeded the cost of production of petrol. The price of international crude is $43 per barrel, which means around Rs 17 per litre for petrol. If you add another Rs 10 as basic OMC cost, then the total cost of petrol should be Rs 27, and diesel should be Rs 25 per litre. Next time you go for a refill at a pump, you will know how much you are paying in taxes.

 

Question 2: Indirect taxes hurt the middle and lower income groups the hardest. Why is the government not taking any action?

Riding on the high excise duty on petroleum, the indirect tax collection has gone up by 36% for the first 7 months of this fiscal year and stands at Rs 3.82 lakh crores. Excise duty alone grew by 68% and stands at Rs 1.47 lakh crore. The government has also increased Service tax from 12.6 % to 14.5%.

Customs revenue grew by 16.8% to Rs 1.22 lakh crore and Service tax revenue expanded by 26.1% to Rs 1.12 lakh crore in the same period.

Indirect taxes hit the lower income groups the hardest, and with Corporate tax being reduced to 25% from 30%, we need to ask who does the government serve – the rich or the poor?

 

Question 3: How is this government stimulating the economy?

ICRA, an independent rating agency has estimated the government will save close to Rs 80,000 crore from the cheaper oil imports in 2015-16. If we include the various taxes that have been levied by the government, that figure would be much higher.

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Despite significant increase in collection of excise, custom and sales tax, the Finance Ministry is expecting a 5-7% shortfall in tax collection. This can mean that direct taxes are significantly lower, and consumption is faltering.

With unabated prices and stagnant rural wages & job creation, the numbers being dished out by the government must be questioned. We are being told that India is growing at 7.4%, the WPI is negative and CPI is 4.5%. Yet there is poor collection of taxes, farmers are committing suicide because of rural distress, and the youth are finding it difficult to find jobs. Why?

Source- INC.IN