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Fuel is taxed both by central government and state governments with impunity to satiate their never ending need of revenues. 
 
Andhra Pradesh, Delhi and Maharashtra have increased VAT on diesel and petrol to mop up more revenues. Centre also increased excise with impunity in recent past. 
 
Sudden drop in crude prices had raised expectations of consumers that retail prices of transport fuel will decrease but the Centre and the states slapped additional taxes only. 
 <keyword id="6356076" type="UNKNOWN" weightage="20" keywordseo="indian-economy">Indian economy</keyword> was severely impacted due to rise in global crude oil prices in last seven to eight years. 
 
Taxes on oil had always been an easy and assured source of revenue. Though initially prices were kept high to promote efficient use of fuel oils, with time high taxes became major component of government revenue and then dependence. 
 
Off late, oil prices have crashed but retail prices are way above than import prices. 
 
It is important to recognize the fact that whenever global crude prices rise, it affects all the countries uniformly but high incidence of tax on energy is self inflicted injury. 
 While global energy prices are beyond anybody’s control, high tax on fuels is country’s prerogative. High taxes increase the cost of energy and inflate prices of all the commodities, which fuels <keyword id="22195" type="COMPANY" weightage="20" keywordseo="Inflation">inflation</keyword> because taxes on energy are taxed several times before goods are ready for end consumers. It calls for more revenue and thus need for more taxes. It is a vicious circle. 
 
Clue can be taken from the US’ economy. Perhaps, US is the only country which has recognized the fact that high cost of energy is inflationary and therefore energy is least taxed. 
 
Among 20 OECD nations, the US is least taxed nations on energy. This also helped them being competitive worldwide. Over the years, US economy has grown manifold. Surplus generated over decades have put US ahead of many countries and US dollar is one of the strongest currencies worldwide. 
 
It is also pertinent to mention that petrol and Aviation Turbine Fuel (ATF) are treated as luxury fuels and taxed with contempt. One of the studies says that petrol is used by end consumers hence its price is not inflationary. This is a wrong premise. High prices of petrol and ATF are as inflationary as diesel prices. 
 
Similarly, ATF is also viewed as a rich man’s fuel and taxed with impunity especially by the states. Diesel price was seen as inflationary and was subsidized in the past but high state taxes brought no relief to consumers or economy. 
 
It is necessary that Centre as well as states realize that high taxes on fuels are highly inflationary and detrimental to economy. 
 All along during <keyword id="6354679" type="ORGANIZATION" weightage="20" keywordseo="GST">GST</keyword> discussions, states have successfully convinced Centre to exclude fuel oils from including into GST or else states would lose their major source of revenue. The issue needs to be debated extensively and then only solution may emerge in due course of time. 
 The possible solution is to reduce <keyword id="3286598" type="UNKNOWN" weightage="20" keywordseo="taxes-on-fuel">taxes on fuel</keyword> oils gradually and increase excise or service tax on other goods to compensate loss of revenue on account of lower tax on fuels and declare fuels as notified commodity till such time GST is through. Once GST is through, bring transport fuels under GST. 
 
High taxes on energy have cascading impact on prices. It’s a major component of prices of goods and services. It’s a single major cause of inflation. If taxes on fuels are reduced, expenditure of both government and corporate will come down. Essential commodities will become cheaper. Overall economy will deflate and inflation will be checked. Indian goods will become more competitive in the world market and exports will grow. Cheaper fuels shall have tremendous positive impact on Indian Economy. 
 
(The article is authored by Sameer Garg. You can reach out to him at samg1960@gmail.com) 
 
(Image: Indiatimes)

Here’s how taxes on fuel has impacted the Indian economy

<ul><li>Indian dairy major <keyword id="7656779" type="UNKNOWN" weightage="20" keywordseo="Amul-Today">Amul today</keyword> hiked prices of its milk, for the first time in two years. </li><li>The Gujarat-based co-operative hiked prices of milk across the country by ₹2/litre, due to pressure from unions and higher input costs. </li><li>Oil marketing companies have raised fuel prices twice in the last two days. </li></ul>Indian dairy major Amul today hiked prices of its milk, for the first time in two years. The Gujarat-based co-operative hiked prices of milk across the country by ₹2/litre, due to pressure from unions and higher input costs. Other milk producers are expected to take cues from the country’s largest milk seller, and dairy company--and follow suit. Amul’s last hike in milk prices - which was also ₹2/litre - took place in <a href="http://businessfortnight.com/amul-hikes-milk-prices-rs-2-per-litre-delhi-ncr/">March 2017.</a> Increase in fodder rates have played a part in this <keyword id="73422" type="PERSON" weightage="20" keywordseo="Price-hike">price hike</keyword>, across brands. This comes as the second bad surprise that Indians have to deal with, this week. Oil marketing companies have raised fuel prices twice--- in the last two days. They are no more under pressure from the government which asked them to <a href="https://www.businessinsider.in/fuel-prices-set-to-rise-as-lok-sabha-elections-come-to-a-close/articleshow/69197404.cms">keep prices artificially low</a> -- instead of benchmarking them to international crude prices. Yesterday, the day after polling concluded, the prices of both petrol and diesel were hiked in major cities, <a href="https://www.businesstoday.in/current/economy-politics/petrol-prices-increase-up-to-10-paise-diesel-by-16-paise-as-lok-sabha-elections-2019-conclude/story/348185.html">by ₹0.10 and ₹0.16</a>, respectively. Petrol and diesel prices were hiked again today by <a href="https://www.indiatoday.in/business/story/petrol-diesel-prices-rise-for-second-consecutive-day-after-lok-sabha-polls-end-1530689-2019-05-21">₹0.05 and ₹0.10</a>. This is a rude awakening for Indian consumers, who were enjoying the ‘feel good’ prices for the last two months. The government instructed state-owned oil marketing companies - which includes Indian Oil, Bharat Petroleum and Hindustan Petroleum - to keep prices stable in April and May so as to keep consumer sentiment upbeat. Unfortunately for the oil marketers, this request came at the wrong time. In the last few months, <a href="https://www.businessinsider.in/fuel-prices-set-to-rise-as-lok-sabha-elections-come-to-a-close/articleshow/69197404.cms">global oil prices have been rising</a> owing to curbs in production by Saudi Arabia and lesser exports from sanction-hit Iran and Venezuela. Now, fuel retailers will be eager to make up for those losses they had to absorb in the last few months, by hiking prices. 
 
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 SEE ALSO: <a href="https://www.businessinsider.in/indians-will-have-to-deal-with-higher-oil-prices-as-polling-ends-and-global-supply-remains-curtailed/articleshow/69410192.cms">Indians will have to deal with higher oil prices as polling ends and global supply remains curtailed</a>

Indian households face a double whammy with price hikes in milk and fuel

<keyword id="6355572" type="General" weightage="50" keywordseo="sri-lanka" source="Orion">Sri Lanka</keyword>'s state-owned Ceylon Petroleum Corporation (CPC) has increased <keyword id="61430" type="General" weightage="20" keywordseo="fuel-prices" source="Orion">fuel prices</keyword> to a record high. With the latest price hike on Monday, the price of Octane 92 <keyword id="6367091" type="General" weightage="20" keywordseo="Petrol" source="Orion">petrol</keyword> rose by 33.1 per cent to a record 338 Sri Lankan rupees ($1.04) a litre, and the price of auto <keyword id="6356109" type="General" weightage="20" keywordseo="diesel" source="Orion">diesel</keyword> increased by 64.2 per cent to 289 rupees. This is at par with the prices of Lanka IOC, a subsidiary of Indian Oil Corporation, which hiked its fuel prices from midnight Sunday, Xinhua news agency reported. CPC Chairman Sumith Wijesinghe said last week that they were losing between 800 to 1,000 billion rupees a day due to selling the fuel at a below-market rate. However, it is not the first time the CPC has increased fuel rates this year. It had introduced fuel rationing on April 15. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/international/news/nearly-400-million-people-in-china-under-full-or-partial-lockdown-due-to-a-strict-zero-covid-policy/articleshow/90927364.cms">Nearly 400 million people in China under full or partial lockdown due to a strict zero-Covid policy</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/tech/news/after-elon-musk-founder-jack-dorsey-slams-twitters-board-amid-takeover-push/articleshow/90914374.cms">After Elon Musk, founder Jack Dorsey slams Twitter's board amid takeover push</a>

Sri Lanka raises fuel prices to a new record high

Thiruvananthapuram, Mar 14 (): Kerala unit of theCPI(M) on Saturday slammed the Centre's decision on hike inpetrol and diesel rates even as there was a fall ininternational oil prices.Terming such a move during an epidemic like COVID-19 asgross injustice to the people, CPI(M) state secretary KodiyeriBalakrishnan said the decision came at a time when the crudeoil price in the international market was at the lowest in thelast 20 years.The Central government hiked excise tax by Rs three perlitre on petrol and diesel. This is happening when the crudeoil price in the world is at the lowest in last 20 years, hesaid."The decision to raise the price at a time when peoplewere worried about COVID-19 is gross injustice to the people,"Balakrishnan said. He also said the ruling party of the country has gotno commitment to the people. "A strong protest should beraised against the policies of the Central government policy.We also demand immediate withdrawal of the hike," he said. Excise duty on petrol and diesel was on Saturdayhiked by Rs 3 per litre as the government looked to mop upgains arising from fall in international oil prices. Special excise duty on petrol was hiked by Rs 2 toRs 8 per litre in case of petrol and to Rs 4 in case ofdiesel, an official notification said. Additionally, road cess on petrol was raised by Rs 1per litre each on petrol and diesel to Rs 10. The increase in excise duty would in normal courseresult in a hike in petrol and diesel prices but most of itwould be adjusted against the fall in rates that would havenecessitated because of slump in international oil prices. RRTNVG NVG

CPI(M) condemns hike in fuel prices, says it's injustice

<ul class="summary-list"><li>Japan's Nikkei stock average fell 5.8% today, its biggest single-day decline since 2020.</li><li>The slump was partially fueled by a sharp decline in the US economic outlook.</li></ul>Japan's stocks took a hit on Friday, fueled by economic concerns in the US and the Bank of Japan's interest-rate hike earlier this week.The Nikkei Stock Average closed at 35,909.70, down 5.8%, marking its largest daily decline since March 2020 after <a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/asian-shares-mixed-japan-s-nikkei-hits-a-new-high-1033542334">hitting record highs earlier this month</a>.The drop comes just two days after the Bank of Japan raised interest rates in an effort to boost the <a target="_blank" href="https://www.businessinsider.com/japan-yen-slump-intervention-currency-buy-us-involvement-interest-rates-2024-5">yen's value</a> amidst higher inflation. The BoJ raised rates from a range of 0% to 0.1% to a benchmark 0.25%.The decision was a surprising one, given that Japanese officials typically stray away from such hawkish actions. The bank raised interest rates for the <a target="_blank" href="https://www.businessinsider.com/japan-central-bank-raises-interest-rates-17-years-2024-3">first time in 17 years</a> back in March, ending its negative interest-rate policy.Japan's semiconductor companies drove the index's decline, with Tokyo Electron dropping 12% after Intel missed earnings estimates and announced cost-cutting measures that plan to save $10 billion next year.Friday's slump was also fueled by signs of a cooling US economy. US stock indexes have <a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/stock-market-today-july-jobs-report-nonfarm-payrolls-unemployment-increase-2024-8">tanked across the board</a> over the past two days due to a combination of discouraging economic data points, including rising unemployment and slowing manufacturing and construction.US unemployment soared past estimates to the highest level seen in nearly a year, while the ISM manufacturing index dropped to an eight-month low.BoJ Governor Kazuo Ueda said in a press conference Wednesday that if Japan's economy moves according to the bank's projections, it will continue to raise interest rates.Bank of America analysts say they expect the BoJ's next hike in January."Looking ahead, the market's terminal rate expectations may rise somewhat and bring the timing of rate hikes forward," the analysts said in a Thursday note, adding, "While acknowledging the possibility of an earlier move, our economist still expects the next rate hike to take place in January."Others add that, as the market prices in the rate hikes, it will adjust accordingly."As the likely pace of interest rate hikes becomes clear via economic indicators going forward, we think share price discounting will diminish," analysts from JPMorgan said in a Thursday note.

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Here’s how taxes on fuel has impacted the Indian economy

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Indian households face a double whammy with price hikes in milk and fuel

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Sri Lanka raises fuel prices to a new record high

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CPI(M) condemns hike in fuel prices, says it's injustice

PTI

Why Japanese stocks just had their worst day in 4 years

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