Lifetime tax on luxury taxis worries cab operators

While Chief Minister D.V. Sadananda Gowda's proposal to reduce sales tax on diesel by 1.25 per cent has not brought cheer to the transport industry, the proposal to withdraw quarterly tax payment system and to levy lifetime tax at 15 per cent of vehicle's value for motor cabs (taxis) if their cost is more than Rs. 10 lakh, has annoyed many in the industry.

The decrease in sales tax will make diesel cheaper only by about 50 paise.

“What we had asked the government was to bring diesel price in Karnataka on par with that existing in the neighbouring States to encourage truckers to fill tanks in the State itself,” G.V. Bhushan Narang, chairman of the Petroleum Dealers' Association, Karnataka, told The Hindu.

Proposed hike

Mr. Narang said the cut would be of no consequence at a time when the Union government was planning to hike fuel prices after the Budget session.

G.R. Shanmugappa, president of the Federation of Karnataka State Lorry Owners' and Agents'Association, said he had impressed upon the Chief Minister about the advantages of slashing the entry tax on diesel.

“Now, about 11 lakh litres of diesel is sold every day in the State. If the price is reduced by about Rs. 2, the government might lose around Rs. 2.2 crore. However, there would be an increase in the sales of diesel by about 7 lakh litres bringing in revenue of Rs. 6.3 crore. Thus, the government would stand to gain by Rs. 4.1 crore,” he said.

Diesel is sold at Rs. 44.4 a litre in Tamil Nadu, Rs. 45 in Maharashtra, Rs. 45 in Andhra Pradesh and Rs. 46.21 a litre in Bangalore.

Bangalore Tourist Taxi Operators' Association general secretary K. Radhakrishna Holla said the proposal to levy 15 per cent lifetime tax on cabs would affect the luxury tax segment.

Sources in the Transport Department, however, said that many luxury car owners were getting their vehicles registered as taxis to evade hefty payment of road tax.

Hence, lifetime tax on luxury cars was proposed, they said.