Panel moots 10%-25% green tax on diesel cars

New Delhi: The Environment Pollution Control Authority has recommended a steep pollution tax, ranging from 10% to 25% of the vehicle's cost, on private diesel cars to bridge the gap in the fuel costs of petrol and diesel.

In a note to the Supreme Court, the EPCA suggested that an environment compensation charge (ECC) of 10% of the vehicle's cost be imposed on diesel cars with engines up to 1200cc. ECC for cars with engines up to 2000cc should be 20% while for those above 2000cc, it should be 25%, the authority said. EPCA is an SCmandated body tasked with implementing measures to curb air pollution in Delhi and NCR.

The suggested tax is many times higher than the 1% environment cess some carmakers had offered while seeking the lifting of the SC -imposed ban on sales of big diesel cars (2000cc and higher) in the Capital and NCR.

EPCA submitted the note on Monday and said the proposed ECC on diesel cars should “equalise the fuel cost of both petrol and diesel cars.“ “Diesel cars cannot pay less tax per litre of fuel compared with petrol cars and two-wheelers. This needs to be equalised to control the growing use of low-tax diesel fuel, meant for farmers and freight, in cars,“ the note stated. As on July 1, 2016, the total excise and VAT difference between the two fuels was Rs 9.94 per litre and the retail price difference was Rs 10.46 per litre. The formula adopted by EPCA for calculating ECC was to determine the difference in taxes paid the difference in taxes paid by petrol and diesel car users based on their lifetime fuel consumption. To calculate fuel use, EPCA assumed that each car ran 12,199km in a year and took the fuel consumption of each model.

A total period of 15 years was considered to estimate the tax paid for respective fuel consumption. EPCA in its note said the purpose of the ECC was to modify consumer behaviour and correct market imbalances. Inflation wasn't been accounted for. EPCA put cars in two broad categories--those with engines less than 1500cc and those above 1500cc. Cars with engines above 2000cc were considered separately .Based on a compilation by an automotive magazine quoted by EPCA, only four diesel car models had engines less than 1200cc, while about 50 were in the 1200 to 1500cc category , and 68 were above 2000cc.

EPCA has also addressed the “health cost of diesel vehicles“ in its note, statingb that more than 2,80,000 individuals were at additional risk of cancer in Delhi NCR from a lifetime exposure to diesel exhausts. “However due to unavailability of comprehensive quantifiable cost of health damage specific to Indian context, at present the same is not being factored in ECC,“ the note stated.