Monday, June 9, 2008

'In case of petrol and diesel, the demand is largely price-inelastic'

‘Taxes are the smallest factor influencing fuel prices’

Will the impact of the duty reductions on the retail price of petrol and diesel really bring in any change, apart from short-term price reduction? Not much, if you ask Mr Vivek Mishra. Vivek is a tax partner based in New Delhi and leads the indirect tax practice of Ernst & Young in India. “In our view, these types of questions are slightly misplaced for one key reason. In a scenario of rising crude oil prices, the taxes on pe trol and diesel are a small component of a much bigger phenomenon,” says the expert, who has worked with several leading companies assisting them make the transition into the VAT regime. Business Line caught up with him over the email to quiz on the tax angle affecting fuel prices. Here’s what he had to say…
Excerpts from the interview:

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