CSE urges Chidambaram to stop incentives for diesel, big cars

New Delhi, Dec 20 (UNI) The Centre for Science and Environment(CSE) has urged Union Finance Minister P Chidambaram to remove tax incentives for diesel cars and excise cuts for bigger cars in the next budget underlining that both were detrimental to air quality and energy consumption.

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 tax policies that were encouraging diesel cars would force the government to 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 car sales by 2010, the government was in danger of progressively losing revenue from this segment due to tax difference on diesel and petrol fuels.

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 within four years (given lower diesel fuel prices), the government shouldered the massive losses as a subsidy to the rich, in perpetuity. Public health costs had not even been accounted for.

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

The more relaxed limit for defining a small diesel car had brought within 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 to Rs 25,000 fanning its growth.

Industry estimates showed that the market share of diesel cars had already increased to over 30 per cent in the last 18 months and the share 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 and 2006. This overwhelming growth could be devastating in cities desperate for solutions to smoke, particles and NOx.

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

It was very worrying that while there was still no roadmap to get clean diesel fuel that could enable use of advanced emissions control devices to clean up emissions and reduce its toxicity, the official policies were encouraging massive dieselisation of the car fleet, the NGO said.

UNI NAZ PA ND1112