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I am surprised that auto majors like Mercedes Benz and BMW have adopted a 'sour grapes' attitude to the lower excise duty and taxes offered to small car models, as reported in The Eco Times, Mumbai on page-20 of 31st March 2009 under the byline of Shri Chanchal Pal Chauhan, New Delhi. It seems they are unhappy with the 8% duty for 'small cars', as opposed to the 20% duty that they have to pay for the 'larger cars' that they specialise in. The reasons they claim is that instead of size (over 4 meters length), the car safety, emission and fuel efficiency should be the criteria for determining taxes. They claim to introduce the latest technology in their models and have no incentive to innovate for the local market due to the higher taxes.
Size is an unsatisfactory method to determine taxes, in this even Mahindra & Mahindra are affected, when it is clear that their main market is in the rural areas where road condition and passenger load are vastly different from metros. Minimum safety is specified and if some offer more, they charge more, and so where is the inequity?
Except for M&M, it is clear that the so called large car manufacturers focus on exclusivity and so their clients do not worry about price. In fact, high price is a selling point with a certain class who they target, so the taxes should not be a worry at all.
Next, what has prevented these newly tax conscious manufacturers from using their innovation, to build smaller cars? I think, they have no market for these.
The key issue is the carbon footprint, not just the fuel efficiency or emissions. It may be worthwhile if SIAM (Society of Indian Automobile Manufacturers) would tabulate the 'fixed plus variable' carbon footprint over a ten year life for all these so called small and big car models. Annualised figures for a five year old car would be useful too. This would reveal the true cost to the environment. The results might surprise all and the differential taxes would then be
self-explanatory.
There is no doubt that life time carbon footprint should be used for determining taxes with due weightage given for end use. This should satisfy all. All those connected with transport of any kind should worry about the Carbon Footprint and not just efficiency at a single point in the chain.
Size is an unsatisfactory method to determine taxes, in this even Mahindra & Mahindra are affected, when it is clear that their main market is in the rural areas where road condition and passenger load are vastly different from metros. Minimum safety is specified and if some offer more, they charge more, and so where is the inequity?Except for M&M, it is clear that the so called large car manufacturers focus on exclusivity and so their clients do not worry about price. In fact, high price is a selling point with a certain class who they target, so the taxes should not be a worry at all.
Next, what has prevented these newly tax conscious manufacturers from using their innovation, to build smaller cars? I think, they have no market for these.
The key issue is the carbon footprint, not just the fuel efficiency or emissions. It may be worthwhile if SIAM (Society of Indian Automobile Manufacturers) would tabulate the 'fixed plus variable' carbon footprint over a ten year life for all these so called small and big car models. Annualised figures for a five year old car would be useful too. This would reveal the true cost to the environment. The results might surprise all and the differential taxes would then be
self-explanatory.
There is no doubt that life time carbon footprint should be used for determining taxes with due weightage given for end use. This should satisfy all. All those connected with transport of any kind should worry about the Carbon Footprint and not just efficiency at a single point in the chain.
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