Delhi govt wants to discourage pvt cars, push buses instead

Wednesday, December 31, 2008
Source: http://timesofindia.indiatimes.com


With one-tenth of the city's space occupied by private vehicles crammed up on roads and parking lots, and a pathetic public transport
system, the third-time victorious Congress government in Delhi is planning a series of radical measures to beef up its fleet of buses and, at the same time, punish those using private cars, especially big ones, through a dose of high taxes.

It's learnt that the Delhi government is giving the finishing touches to a cabinet note that aims to scrap all taxes on buses and steeply hike the one-time road tax for cars and also introduce a ``congestion tax'' as a pilot project. The money raised from the increased taxes, it is proposed, will go to fund a better public transport system.

The proposal visualizes a big stick for running expensive cars. Towards that end, it proposes that those buying a car costing more than Rs 15 lakh would have to pay 20% of the car price as a one-time road tax. In other words, if you buy a Rs 15 lakh car you would have to pay another Rs 3 lakh as road tax. If the car costs Rs 20 lakh, the road tax would be Rs 4 lakh, and so on.

But if you want to own a new small car, the proposed tax regime will favour you. A car priced up to Rs 5 lakh will attract only 5% road tax, a car priced between Rs 5-10 lakh will require 10% road tax and a Rs 10-15 lakh car will require you to deposit 15% of its price with the state government.

At present, a new car owner has to pay 2% of the cost of car as road tax if the vehicle is priced below Rs 5 lakh and 4% on a car costing more than that. This tax rate, officials point out, if amortised over the life of the vehicle, works out roughly to Rs 500 per year as tax. Compared to this, the city bus is charged tax on an annual basis as well as on the basis of passenger seats. In Delhi, this tax comes to around Rs 13,000 per bus paid annually, at the minimum.

Officials argue that this high tax leads to rickety and unkempt buses, which still carry almost 70% of Delhi's commuters. Buses also end up being charged roughly 26 times higher than cars that clog 60% of road space but carry little more than 15% of city commuters every day, they add.

The government also wants to test a congestion tax regime on a pilot basis. In areas where the government determines congestion levels are very high, it could increase the parking rates to Rs 100 per hour for large cars and Rs 50 per hour for small cars.

There are also suggestions to levy a cess or charge on private vehicles using the DND. Though it's not clear if the suggestion will make it to the final cabinet note, the government is mulling a Rs 20 per trip tax on cars coming in from Noida. This could fetch up to Rs 1 crore a day for the public transport fund, further bolstering the government's attempt to turn buses and other public transport systems world class.

To avoid cars being registered outside Delhi at lower rates, the proposal suggests the tax regime be homogenized across the NCR. It's pointed out that Delhi lags behind other states in taxing private vehicles. If this proposal is cleared, the capital will match up to states like Andhra Pradesh and Karnataka that charge up to 14% road tax on cars.

The money collected from private car owners will be transferred into a Delhi Urban Transport Development Fund, which will help spruce up the ailing bus system in the city and build transport infrastructure.

Some experts have often pointed out that Delhi has reached a stage where fiscal disincentives for new cars cannot be the only solution as the state has more cars already on road than the other three metros put together. Some others say these huge disincentives for private cars are unrealistic before commuters have a viable alternative option in the shape of a working and comfortable public transport system.