- Busfederation



Copy of input for Pre Budget Exercise sent by the Busfederation to Finance Minister.

In a developing economy like ours, the tax system has to raise sufficient revenues to match expenditure and also for a surplus. It has to serve the goal of equity by raising the incidence on the rich and reducing that on the poorer sections. The tax system has to promote savings, enterprise and hard work.

The goals of saving and enterprise promotion contribute to a higher growth rate, both through a higher and rising savings to income rate and a higher rate of improvement in productivity. Thus an equitable tax system encourages the morale of the community and make people respond more willingly to development efforts.

It is high time that the contemplated tax reforms should not only appease promoters of industries catering to the needs of higher income groups, but also alleviate the teeming millions bordering the poverty line.

It is also heartening to note that you have reiterated again as follows:

"Stating that the Government is committed to tax reforms, Mr.Sinha pointed out that the main emphasis of the Government in this regard has been on enlargement of tax base, broad banding and lowering of tax rates, reducing number of exemptions and concessions besides simplifying the procedural rules and regulations." (The Hindu Business Line - 27th January, 2000)

PASSENGER ROAD TRANSPORT SCENARIO.

Road Transport in India plays an unenviable role. Its importance, both in passenger and goods transportation, cannot be over emphasised. Bus transport facilitates mobility of people in and around the country, on metro and city routes, suburban and moffusil and long distance tourists

Passenger transport industry is capital intensive. The value of the Capital Goods viz. the vehicle, unlike other industrial capital goods and machinery, depreciate rapidly resulting in scraping within a period of 6 to 7 years.

The value of a new passenger vehicle is now around 9 to 10 lakhs. Given the high incidence of insurance premium, road and passenger tax levied by various states and staff emoluments, maintenance cost and given the fact that most of the vehicles are underutilised, the margin is under severe pressure. Added to these is the absence of mandatory requirement to order readjustment of passenger fare with reference to the increase or decrease in input cost. This deficiency is always utilised by the States for political considerations. As a result, operators are postponing replacements and continue using vehicles which guzzle precious fuel, polluting the atmosphere which cry for containment.

The Government has so far given encouragement to car and two wheeler manufacturers with the result that lines of cars and two wheelers clog the arteries, impeding movements of buses which cater to the masses. Government seems to have put a premium on personal transportation rather than public transport.

Excise Duty constitutes a major factor in the cost of vehicles and the components used in them. Manufacturers often hike the prices of these products on one pretext or other in the absence of competitors in certain items like Chassis, Fuel Injection Pumps.

With excise duty levied on advalorem basis, the central revenue often reaps a bonanza with each increase in the price of the vehicle, vehicle components, fuel, etc.

The need for encouraging shift from personal transport to public transport needs no emphasis.

However, this will be possible only if there is sufficient growth in public passenger transport and improvement in their availability with good standard and comfort.

Table below indicates the disproportionate growth in 2 and 3 wheelers, cars and buses.

Why and how this has happened? That is a big past story and need not be narrated now.

To achieve the goal of decongested Indian roads, especially around cities and suburbs, the percentage of growth of public transport vehicles should be many fold than cars, three and two wheelers.

To contain atmospheric pollution which poses serious health hazard to the community use of private personalised vehicles should be discouraged. The focus should be the use and switch over to public transport. This will be possible only if the bus services are frequent, comfortable, prompt, safe, adequate and economical.

In the context of the dismal failures of almost all the State Transport Undertakings in the country, private operators should be encouraged to meet the shortfall in the traffic needs of the public by means of various incentives.

In the absence of big companies in the field, due to ill advised nationalisation, there exist only small operators with 1 to 5 vehicles often with aged ones with whaffer thin margins.

Tax sops is the crying need of the hour. It is being advocated that the policy should be incentivising scrapability. This means quicker replacements.

The incentive advocated being less excise imposts on vehicles and fuel, less Sales Tax and more percentage of depreciation than the prevalent ones.

In the context of spiraling fuel prices, being a global phenomenon, the Hon'ble Finance Minister is bound to usher in a regime of lower excise duties on passenger vehicles, passenger vehicle components and petro products to do justice to those who are already in the field and ready to respond more willingly to shoulder further tasks to the Nation’s development efforts.

We have precedent in this direction. When in the 80s the Government waived excise duty on cars covered by Taxi permits.

Further, downward adjustment of the levy together with increased per centage of depreciation will spur the volume of units sold, which will take care of the buoyancy in Excise Revenue. This is reinforced by the Statement of Mr.G.P.Goenka, that there is clear evidence that lower tax rates have resulted in significant increase in revenue collection.

This again will benefit the State Transport Undertakings in India also to reduce their continued losses and render service with a contented workforce the reason being a workforce in a profit making concern is more involved in its earning and growth than one in a losing concern as they always are under threat of retrenchment or fired with some incentives.

We, the Federation of Bus Operators' Associations of Tamil Nadu, fervently implore that the possibility of downward adjustment of Excise levies on Heavy Passenger Commercial Vehicles and components used in them should not be lost sight of on the eve of the presentation of the Union Budget for 2000 - 2001.