CSE urges FM to stop incentives for diesel, big cars

New Delhi, Dec 20: The Centre for Science and Environment(CSE) hasurged Union Finance Minister P Chidambaram to remove tax incentives fordiesel cars and excise cuts for bigger cars in the next budgetunderlining that both were detrimental to air quality and energyconsumption.

Pollution and energy impact of promotion of these cars would be severe in polluted cities of the country, it said in a letter.

The CSE said its latest estimates showed that the current fuel taxpolicies that were encouraging diesel cars would force the governmentto absorb colossal revenue losses on account of the 'luxury'consumption of diesel.

With diesel cars expected to be nearly 50 per cent of the new carsales by 2010, the government was in danger of progressively losingrevenue from this segment due to tax difference on diesel and petrolfuels.

Currently, its cumulative effect on a nation-wide scale was a staggering more than Rs 300 crore.

While diesel car owners recovered their premium for a car withinfour years (given lower diesel fuel prices), the government shoulderedthe massive losses as a subsidy to the rich, in perpetuity. Publichealth costs had not even been accounted for.

The current tax concession for small cars was a loophole forincreasing diesel car sales. The tax incentives granted to the smallcars and special allowance made for the compact diesel cars under thelast Union budget would progressively expand the share of the dieselsegment.

The more relaxed limit for defining a small diesel car had broughtwithin net a large number of diesel cars to qualify for the tax cut.This had resulted in price cuts for diesel cars by about Rs 12,000 toRs 25,000 fanning its growth.

Industry estimates showed that the market share of diesel cars hadalready increased to over 30 per cent in the last 18 months and theshare was expected to be 50 per cent of the total car sales by 2010.

In Delhi diesel cars increased by 425 per cent between 1996 and2006. This overwhelming growth could be devastating in cities desperatefor solutions to smoke, particles and NOx.

Citing above arguments, the CSE demanded urgent intervention tolevy special environment cess on diesel cars and SUVs to nullify theprice advantage of running cars on cheap and poor quality diesel andrestrain their growth to check growing emissions of toxic dieselparticles that had been branded as human carcinogens by the WHO and keyregulatory authorities around the world.

It was very worrying that while there was still no roadmap to getclean diesel fuel that could enable use of advanced emissions controldevices to clean up emissions and reduce its toxicity, the officialpolicies were encouraging massive dieselisation of the car fleet, theNGO said.

UNI