Terming the proposal to levy vehicle tax on diesel cars as a regressive step for industry, General Motors (GM) on Monday said that industry body SIAM and the company has recommended Re one per litre hike in diesel prices to the Government, with a view to end market distortion.

With vast disparity in fuel prices, the demand for diesel cars had reached up to 85 per cent and petrol cars had come down to 15 per cent, which otherwise usually remained at 50:50 per cent levels in India.

The petrol prices had touched Rs 78 per litre level in the recent past, while diesel prices have remained stable at over Rs 40-45 per litre or so.

“We as well as Society of Indian Automobile Manufacturers (SIAM) have recommended hike in diesel prices by Re one per litre as it would help government earn Rs 6,000 crore revenue,” GM Vice President Corporate Communication Mr P Balendran told newsmen.

“The government’s revenue earnings from Re one per litre hike shall be three times more as compared to Rs 2,500 crore revenue from the levy of 5 per cent vehicle tax on diesel cars,” he said.

The recommendation by GM and SIAM comes in wake of a Union Planning Commission’s study.

“The Planning Commission has conducted a study and the report has come out saying that privately owned passenger cars consume only 1.03 per cent of the total diesel consumed in the country,” Mr Balendran claimed.

“Therefore, what we have recommended is that levy of additional diesel tax is regressive step for industry,” he said.

“All OEM’s have recommended that right approach will be to increase the diesel prices in small doses and bring down the petrol prices in small doses, so that market distortion is addressed and the sector performs well,” he said.

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