New Delhi, July 28, 2004: Centre for Science and Environment (CSE) has welcomed the Delhi government's decision to impose environment cess on diesel passenger cars and multi-utility vehicles, and simultaneously raise the sales tax on diesel in the budget announced last week. The government is also examining the possibility of imposing an additional entry tax on diesel vehicles registered outside Delhi, to discourage their entry into the city. These long awaited steps were urgently needed to arrest the alarming trend of dieselisation in Delhi, said Sunita Narain, director, CSE.
Speaking at a press conference today, Narain also criticised the motivated designs of the automobile industry, transporters and fuel retailers to scuttle these moves for shortsighted business gains -- in total disregard of public health concerns. Anumita Roychowdhury, coordinator of CSE's Right to Clean Air Campaign, took strong exception to the misleading claim made by the automobile industry association, which said that environment cess on diesel cars is not scientific as this discriminates between vehicles that meet existing emission norms and comply with government regulations. The industry, she said, is concealing the fact that Euro II emission standards that are currently in force in the city are discriminatory as they legally allow diesel cars to pollute more. Diesel vehicles are designed to emit more nitrogen oxides and particulates compared to petrol cars. "These are the pollutants we should be worrying most about," said Roychowdhury.
Growing scientific evidence from across the world points to the toxic effects of poor quality diesel. Recent reports from the US Environment Protection Authority (USEPA) show that diesel engines emit almost 100 times more particulate matter than petrol engines. Japanese scientists have isolated a deadly compound in diesel fumes that is the strongest carcinogen known. Diesel particulate matter has been branded as a probable human carcinogen by scientific organisations and regulatory agencies such as the International Agency for Research on Cancer, World Health Organization and the California Air Resources Board. A Natural Resources Defence Council study in the US shows that children riding diesel school buses are being exposed to 46 times the cancer risk considered significant by the USEPA.
CSE has consistently pointed out that the passenger car segment is in the deadly grip of dieselisation. Share of diesel cars in total car registration has jumped from 4 per cent in 1998-99 to 16 in 2002-03; petrol car registration has stagnated during the same period. Annual incremental growth rate for diesel cars is as high as 106.3 per cent, as opposed to 12.27 for petrol cars (see attached graphs).
Industry's resistance to the government move is retrograde and damaging, especially at a time when regulators have finally noticed the pollution potential of diesel vehicles. The urgent need for elimination of price advantage of diesel cars and their toxic emissions has found policy acceptance even at the Centre. The Union ministry of environment and forests' Raja Chelliah committee has recommended an additional excise duty and emissions tax on diesel vehicles to "neutralise the price advantage". Yet another policy document -- the Union ministry of urban development's draft national urban transport policy -- states categorically that diesel cars take unfair advantage of an artificially low price and that personal diesel passenger cars "would be discouraged in million plus cities. This could be by way of much higher registration fee to offset the price advantage or by way of an outright ban".
CSE has strongly urged the Delhi government not to let business designs derail "one of the most path-breaking decisions taken in the country". This application of 'polluter pays' principle will not only help control the trend of dieselisation, but also generate revenue for the Delhi government that can be spent on other air pollution control measures -- including improvement of the public transport system. Any step taken backwards now will only amount to an unfair subsidy for rich owners of diesel cars.
The complimentary step of increasing the sales tax from 12 per cent to 20 per cent is the first attempt to correct the tax distortion that had marred the fuel market in Delhi. With this 8 per cent hike, Delhi has aligned itself with the uniform floor rate for sales tax for states in the country. Detractors should note that even after this correction, sales tax in Delhi is still low compared to cities like Mumbai, Ahmedabad and Chennai. If the government had brought the sales tax rate at parity with Mumbai, where it is 34 per cent, it could have netted additional revenues of Rs 400 crore annually.
The bogey raised by transporters and fuel retailers that higher tax in Delhi will push demand across the border to Haryana (which has lower taxes) is baseless. The impact will be negligible. A sizeable fraction of the public transport fleet is already on CNG. It is possible to encourage the remaining segment of the city commercial fleet to move to CNG. The Supreme Court has already directed the government to speed up the construction of the bypass around Delhi so that transit traffic - trucks and other commercial vehicles -- can be taken away from the city. The implication of the cross border shift is, therefore, minimal and cannot cause any great loss to the city.
CSE feels that any backtracking at this stage will destroy the process of evolving fiscal polices that are urgently needed to phase in clean technology.
* For details, please contact Anumita Roychowdhury or Chirag Shah, Right to Clean Air Campaign, CSE on 29955124, 29955125, 29956394 or 29956401. You can also write to them at anumita@cseindia.org or chirag@cseindia.org * To download this press release and its attached graphs and charts, please visit http://www.cseindia.org/campaign/apc/scary_trend.htm
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