BackA welcome decision
Lower fuel prices act like a tax cut. They put more money in the hands of consumers to spend. They reduce input costs for companies
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Lower fuel prices act like a tax cut. They put more money in the hands of consumers to spend. They reduce input costs for companies.
The many reductions in domestic fuel prices since August have been akin to a stimulus. The increase in excise duties on fuel announced by the government on Thursday may thus seem puzzling. They should actually be seen as a small tax hike after what effectively have been tax cuts. It is also useful to remember that excise duties on fuels have been reduced sharply in recent years to protect Indian consumers from higher global fuel prices. The most recent of these duty cuts on some varieties of fuels was in the July budget announced by finance minister Arun Jaitley.
The tax hikes come in the wake of the austerity measures announced this month. It shows the government is serious about meeting its fiscal deficit target. But it also means that public finances are off-track.
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