[sustran] Re: Delhi hikes road tax for luxury cars, high-end bikes

Ashok Sreenivas ashok.sreenivas at gmail.com
Tue May 25 21:36:44 JST 2010


Simon

When Dixit says 'marginal effect', she means 'negligible effect' - i.e.
she doesn't expect sales of two-wheelers and small cars to drop and so
the automobile industry need not worry. Interestingly, the road taxes in
other states of India are considerably higher (e.g. the Kharola-Tiwari
paper says that in Karnataka, it was 8%  for two-wheelers costing less
than Rs 50,000 and 10% for small cars) and still doesn't prove much of a
deterrent to purchasing vehicles. So, I doubt if this is going to change
the Delhi-ite's behaviour much. Perhaps, it would, at best, reduce the
practice of people registering their vehicles in Delhi and using them in
Gurgaon or Noida (as I'm sure must have been the practice earlier since
Delhi's taxes would have been lower than Haryana or UP).

Ashok


On 25/05/2010 1:00 PM, Simon Bishop wrote:
> Hi,
>
> It's good news that cars are becoming more expensive. I wonder why they didn't consider a yearly tax, or, better still a mileage-based tax that would deter usage?  
>
> Under the existing set up, once you have bought the car/motorcycle you have every incentive to use it as much as possible since the fixed cost of tax gets lower the more you drive.  
>
> The zero per cent increase in low price motorcycles I fear will not deter purchase amongst those currently using public transit and will continue to encourage a shift away from this mode - down 19% from 60% of mode share to 41.5% of mode share in a little less than 7 years. 
>
> Would be good to know the appraisal impacts of their new hike if anyone can share with Sustrans.  Just what is the 'marginal effect' Dixit is referring to?
>
> -----Original Message-----
> From: sustran-discuss-bounces+simon.bishop=dimts.in at list.jca.apc.org [mailto:sustran-discuss-bounces+simon.bishop=dimts.in at list.jca.apc.org] On Behalf Of Vinay Baindur
> Sent: Tuesday, May 25, 2010 10:24 AM
> To: Hasire Usiru; CAF2
> Subject: [sustran] Delhi hikes road tax for luxury cars, high-end bikes
>
> Delhi hikes road tax for luxury cars, high-end bikesIANS, May 24, 2010,
> 05.25pm IST
> http://timesofindia.indiatimes.com/city/delhi/Delhi-hikes-road-tax-for-luxury-cars-high-end-bikes/articleshow/5969117.cms
>
> NEW DELHI: Driving a car, especially a luxury car or a high-end motorcycle,
> is set to get costlier in the capital. The Delhi cabinet on Monday decided
> to raise the vehicles' road tax rates in a bid to generate additional
> revenue for the city government.
>
> According to the revised road tax rates the cabinet cleared with Chief
> Minister Sheila Dikshit in the chair, two-wheelers costing up to Rs.25,000
> will be charged the existing two percent, while two-wheelers costing between
> Rs.25,000 and Rs.40,000 will now attract four percent road tax and those
> above Rs.40,000 will be charged six percent.
>
> The rate for cars, priced up to Rs.6 lakh, has been doubled to four percent,
> while it has gone up to seven percent on those costing between Rs.6 lakh and
> Rs.10 lakh. Those owning motor vehicles costing Rs.10 lakh would have to pay
> a road tax of 10 percent.
>
> The new rate will come into force after the issue of a notification.
>
> This will go a long way in restricting purchase of luxury cars and
> discouraging use of private vehicles in the city, Dikshit told reporters
> after the meeting.
>
> "The rates have been rationalised to also enhance revenue generation," she
> said, adding rationalisation of road tax was needed to replace the rates
> existing for decades.
>
> Dikshit noted that the new rates were rationalised in such a way that there
> will be marginal effect on purchase of two-wheelers and non-luxury cars.
>
> However, the chief minister said the cabinet decided to retain prevalent
> rates on public utility vehicles such as public goods careers as it would
> have adverse impact on common man.
>
> A Delhi government official said the rates prevalent in the neighbouring
> states were also considered before taking a decision.
>
> The official said about 1,000 new vehicles are registered in the city every
> day and add to the traffic chaos on roads. There are around 6 million
> vehicles in Delhi, which has an estimated population of 12 million.
>
> The state cabinet recently also approved a proposal to revise registration
> fee of properties to generate an additional revenue of Rs.100 crore.
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