Why is tax so high on petrol and diesel in India?
en.wikipedia.org/wiki/Fuel_tax#India
In India, the pricing of fuel varies by state, though central taxes
still are part of the pump price of fuel. The Central and state
government's taxes make up nearly half of petrol's pump price. The
Central govt has different taxes, which amount to about 24–26% of the
final cost. The states taxes vary, but on average end up making about
20–25% of the final cost. As a result, approximately 50% of the pump
cost goes to the government in the form of different taxes.
I understand that India is a developing country and government need funds for various stuff but government already exercises tax on various other things like Income, LTCG, STCG, GST etc. Wouldn't decreasing tax on fuel be more beneficial in the short and long term?
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Globally speaking, India has moderate gasoline prices and the taxes actually are much higher in Europe. www.globalpetrolprices.com/gasoline_prices/
Taxes are complicated and often used to drive certain political agendas or behaviors. For gas taxes it often boils down to: "who pays for the roads". Roads are expensive to build and maintain and gas taxes are a means to structure this as "the more you use the roads the more you pay".
There are, of course, many other reason for taxes to be what they are: encouraging sustainability, subsidizing the car & oil industry, lower/higher cost of doing business, convenient source of revenue, etc.
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