Experts, activists moot new tax policy for vehicles

As the government grapples with traffic snarls and rising vehicle population in the city, experts and environmental activists are urging the government to replace the existing lifetime tax for cars with an annual tax imposed on the road space a vehicle occupies.

The city added more than 6 lakh vehicles last year, with the total number going up from 72.58 in December 2017 to 78.84 lakh in December 2018. The number of cars rose from 14.15 lakh to 15.10 at the same time.

Prof Vivek Murthy of Indian Institute of Management-Bangalore said the growth in vehicle population indicates that the present tax system was not disincentivising vehicle ownership. “Even the idea of congestion tax is more of a reactive approach that fails to curb build up of vehicle occupied area. A preemptive strike is needed to reduce unbridled addition of vehicles by imposing an annual tax on the space they require on the road,” he said.

Dattatreya Devare of Bangalore Environment Trust said the city’s traffic problem was mainly caused by cars. “Right now, the BMTC requires about Rs 260 crore, and the state government has not given any aid. Imposing vehicle area tax in Bengaluru will bring Rs 262 crore per year which can be utilised for public transport,” he said, adding that the menace of two-wheelers on the road was mainly due to high unaffordable public transport.

Devare has also written to Transport Minister D C Thammanna, detailing his calculations. Taking the average weighted area of all cars at 6.26 sq metres and imposition of Rs 3,000 per sq metres, the activist argues that it is more logical to calculate road tax this way. He said two-wheelers require different sets of rules.

Murthy said the tax collection would be much more if one considers the tax on bikes as well. “At first the tax should be at a flat rate for both two-wheelers and cars. Gradually, the tax on motorbikes should also go up,” he said.

IISc professor and transport engineering expert Ashish Verma said the taxation policy should be guided by the principle of disincentivising vehicle ownership. “The idea of the annual tax is welcome because repeated pinch is needed to discourage people from owning and using private vehicles. In Copenhagen, people pay 110% tax on a car, which doubles the price of the vehicle. The government should also consider such a model,” he said.