Petrol prices spell windfall, government rakes in Rs 1 lakh crore from oil taxes

[Yusuf]

Indirect taxes on petroleum fetched the exchequer Rs 1 lakh crore in 2010-11, a jump of 43% or over Rs 30,000 crore from the previous year.

Petrol prices spell windfall for govt - The Times of India

 

[Ray]

Could someone explain the relationship between raising the petrol prices even when the Govt is raking in a windfall?

Or is it because of the increased prices that the Govt has raked in such a huge profit?

 

[Yusuf]

Sir 10% on 100=10
10% on 200= 20.

So when price increases, tax collected increases.

 

[sob]

This is a classical case of robbing Peter to pay Paul. The Govt. prefers to collect money under the head of indirect taxes as it gives them complete control, to waste them on ill conceived populist programmes.

The tax collection comes under the Finance ministry and if the duties are lowered then the money will flow to the Oil companies ( if the benefit is not passed to the consumers). This is a standard practice followed all over the world, but in our case what is glaring is the extremely high level of taxes ( over 55%) on petroleum products and stringing all the loses to the Oil Companies.

Lastly this huge tax colletion is being used by Pranab Da to hide the Fiscal deficit, which is also going out of control.

 

[Ray]

Thanks for the amplification.