An expert panel constituted by the Petroleum Ministry has suggested that additional excise duty be levied as penalty on automobiles that guzzle petrol and diesel.

“Relatively inefficient cars — those with a composite fuel economy rating below the average — may be subjected to a Gas Guzzler Tax,” says the Sub-Group on Refining whose report is to be considered by the Working Group on Petroleum & Natural Gas while finalising the 11th Five Year Plan (2007-12).

The sub-group has suggested that fuel economy standards be averaged and set for each category of cars, two-wheelers and commercial vehicles. And within each segment, each brand would be compared with the average with those below the mark charged extra excise duty as Gas Guzzler Tax.

Among the possibilities is an additional 8 per cent excise duty on vehicles that have 90 per cent efficiency of their segment’s average with maximum tax going up to 24 per cent as the fuel economy drops further. The additional revenue could be used to pay for incentives to buyers of high-efficiency hybrid and fuel cell vehicles. “Tax incentives could be offered in order to stimulate mass production and support initial sales of these innovative vehicles.”

The group, which comprised officials from oil industry and other ministries, has suggested that the fuel economy average be gradually raised to improve efficiency by about 45 per cent in 2012. “They may be increased by 8 per cent per year during the 11th Plan and 5 per cent beyond the end of 11th Plan,” says the report.

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