Editorial: Taxing cars

Taxing products because they are deemed to be luxuries, or because the government wants to reduce their consumption, is an old gambit, and one which has usually not worked. The additional duty levied on cars with bigger engine displacement will add about 2 per cent to the cost of these cars at the lower end of the scale, and 1 per cent higher up the ladder. These are not likely to be deterrents to customers, especially if seen in the context of what they would do to the monthly instalment on a car loan. Nor will the additional imposts add much to the government's kitty "" perhaps Rs 600 crore in a full year, which is one-tenth of 1 per cent of the government's total tax revenue. In other words, while it is entirely desirable that people should be encouraged to use smaller cars (which by definition are also more fuel-efficient), Friday's announcement is not likely to achieve much in that direction, or make any noticeable difference to government finances.

The government does not state the objectives of individual tax initiatives, leaving it to citizens to guess what they might be. Nor does it prioritise its objectives. If it were to be assumed that the more serious intent is not to garner revenue but to reduce fuel consumption in an era of high oil prices and heavy dependence on imports, the question needs to be asked: Does the government have a coherent policy in this regard? For instance, public transport vehicles do not get preferential tax treatment over cars, and one could ask: Why not? City planners have only recently started focusing on how to encourage more people to travel by public transport; the introduction of metro rail services in Delhi and those planned elsewhere, the move to create special bus lanes and to introduce air-conditioned buses are all steps in the right direction for they encourage people with private vehicles to leave them at home and commute by bus or metro. Given the growing problem of finding parking space, there is also something to be commended in the introduction of comfortable radio taxis that can be called at short notice. All of these encourage white collar employees to see public transport as a viable means to reach office without feeling that they have been put through a wringer, and with a clean collar to boot.

As always, the best experiments get conducted in the favoured city of Delhi, where public transport has noticeably improved with more resources and thought being given to the problem "" the excuse this time being the Commonwealth Games of 2010. This is of no help to the other cities. In Mumbai, for instance, the vast majority of office-goers commute by suburban trains, in conditions that are close to sub-human. The railways have been adding extra lines to increase their carrying capacity, and some new alternatives are being worked upon, but all these are far from being enough. To make matters worse, even the city's taxis "" once a source of pride "" are increasingly grubby vehicles in which you fear that some grime will rub off onto your clothes. As for Kolkata, the city has been sanctioned a solitary new metro line, which will take years to materialise.