Petrol prices not only impact the consumer, but also affect the state government in a big way. The pricing pattern does not do any good to the government as it is hardly making much revenue.
Petrol prices not only impact the consumer, but also affect the state government in a big way. The pricing pattern does not do any good to the government as it is hardly making much revenue. The fact that taxes in Karnataka are the higher when compared to other states is doing more harm than good to the state’s economy.
Here's how the state is losing out: The differential pricing of petroleum products and the variable state tax structure are forcing consumers in Karnataka to migrate to other states for paying taxes. As a result, 30% of consumers, including fleet owners of trucks, buses, taxi operators, two-wheelers and autorickshaws, cross over to the neighbouring states, such as Tamil Nadu, Kerala, Goa and Maharashtra, to fill fuel into their tanks.
“Due to the migration of consumers to other states, the state was never making revenue. One of the parameters for calculating the growth rate is the average per capita consumption of petroleum within the jurisdiction of the state, which entails the state to get its share of development incentives from WTO as well as the central government. But the state was not able to show the total sale of petroleum within its territory while the consumption happens within the state. This is due to the fact that the consumers go to lower pricing zones across the border and come back to operate their vehicles in the state,” said Sathish Kamath, a petroleum dealer.
Arun Hundkar, president of Bijapur-Bagalkot Petroleum Dealers' Association, seconded his opinion. “Consumer wants to save money and it's not surprising that they are crossing borders to do that, considering the high tax for fuel in the state,” he said.
Petroleum consumption index puts Karnataka in poor light, as a result the state slides down in national development index ranking.
The Karnataka Petroleum Dealers’ Association has appealed to the previous three chief ministers to cut down the heavy taxes but the state government has not paid heed.
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