Regarding Sales tax and also my take on diesel cars

Today I have 3 spearate blog entries that I plan to write.

First one is Regarding Sales tax and also my take on diesel cars
Second one is about Mac the intelligent man but a Tonga horse
Third one is about how Women's brain is wired differently compared to men.


State Govts Reduce the sales tax on fuel
Yesterday the central government increased the fuel prices. But a day after the price hike, the state governments have reduced the sales tax on petrol Supposedly to reduce the burden on the public.
I was not too happy with the announcement
(1) You again shielded people from getting to know the pinch of rising oil prices. If people do not pay through the nose how will they ever come to know the hard reality that oil is INDEED a non renewable source of energy and we should reduce our usage of oil.
(2) Now the state governments fiscal deficits will rise. Since the state govt has reduced the sales tax, the government looses that much money. Which means that its plans for the year have to be chalked out again. If it was planning to use this money somewhere, then THAT particular project will either be shelved or reduced to size or the state government will take loans to full fil the need which will increase its fiscal defecit.

Very sad indeed...


Diesel Cars A smart Stratergy
About 8-10 years back people did not prefer diesel cars because they were very noisy and produced lot of black smoke. But as technology advanced the cars became less noisy and emitter less smoke. So more people started to buy the diesel cars.
Now a days diesel cars are in full flow. Every other car manufacturing company has a diesel varient of its car and they are fast selling.
Reason: Diesel is cheaper than Petrol and milage is the same so it is cheaper to drive a diesel car...

Diesel is cheaper !!! you are kidding me !!!!
If you go and check the prices of petrol and diesel in UK at the following website: http://www.petrolprices.com/ you will be shocked to see that petrol costs much more than diesel. This is because now a days production of "clean" diesel takes lot of processing and hence costs more...

BUT, in india, diesel is much cheaper than petrol. Also whenever there is a price hike, the price of petrol is always increased more than that of diesel. This is because all High Tension Vehicles (HTVs. Huge Vehicles like Goods carriers) run on diesel. Now these vehicles are run by Merchants to carry their produce to differnt parts of the world. If the diesel prices are increased then these merchants have to pay more to transport their produce there by increasing their production/transportaion costs. This has following consequences:
(a) It hits their profits because they would have negotiated the price for their produce with the customer before hand. Now if fuel prices are increased, they cannot renegotiate the price, so their profits are hit.
(b) Now after taking the hit the first time, for all subsequent transactions they will negotiate the price for produce at a higher price. This rises the cost of the product by the time it reaches the aam junta (common man). SO now the common man has to pay more. So it starts pinching him. So he either cribs and still buys it or will reduce his expenditure on those items.
(c) Either way there is a rise in inflation which gets newspaper headlines with journalists shouting at the top of their voice. They will get hold of few people and ask for their opinion about the rising price of kanda (onion). People would make a grim face and say that they are suffering because of the rising prices... it becomes a political issue.

So what started as a price hike in diesel results in a serious political problem (remember many state governments in maharashtra have lost power because of rise in prices of just one Item: onion).

In order to curtail this big chain of events, the govt always goes soft on rising the diesel price. On the other hand if you increase petrol price at the most the aam junta (common man) cannot travel by his vehicle. SO worst comes to worst he/she would car pool or take the public transport (which BTW runs on diesel...). So it does not have a serious impact. So govt always rises the prices differentially. Bisaed towars rising petrol price by a higher percentage.

Now coming back to the main point. This particular fact is being exploited and people buy diesel cars as the operating cost of a diesel car will always be less than that of a petrol car thanks to the possible impact the price rise of diesel will have.