Income Tax surcharge proposed to overcome fuel price problem
The government is considering a new surcharge on Income Tax to bail out Oil marketing companies reeling under spiralling global crude prices after a move to hike fuel prices was put in abeyance. State run oil Companies are losing about Rs. 20,000 Crores in keeping the oil prices artificially low. And Mr. Murli Deora is apparently unhappy and he told so to the PM and FM. With elections round the corner and the CPM opposed to any oil price hike, life is not exactly comfortable for the PM and the FM. And the Karnataka election results have not really helped. The proposal for a surcharge on income tax was discussed at a meeting between Deora and Finance Minister P. Chidambaram yesterday as the government found the move to hike fuel prices politically explosive and unacceptable to several parties within the ruling coalition, including the Left parties.
According to the petroleum and natural gas ministry, petrol was being sold at a loss of Rs. 16.34 a litre, diesel at Rs. 23.49 per litre, LPG at Rs. 305.90 per cylinder of about 14 kg, and kerosene at a discount of Rs. 28.72 per litre.
And we deprecate subsidy for the farmer!
In the US, petrol prices have risen 20 per cent over the last year and diesel prices 30 per cent. Retail prices in the UK have trebled this year. Indonesia raised fuel prices by 29 per cent for the first time in three years to cut subsidy costs. In India, petrol prices were hiked by Rs 2 a litre in February, but have otherwise remained largely steady.
The Petroleum Ministry's proposal to hike fuel prices by between Rs 5 and 10 a litre found hardly any supporters. So it is now proposing a fuel cess on income tax. This will add to the 3 per cent education cess.