Bus Karo: Subsidy and Taxation Framework (Session III)

A product of WRI Ross Center for Sustainable Cities

ALOKE MUKHERJEE, AMIT BHATT, UMANG JAIN

BUS-BASED PUBLIC TRANSPORT IN INDIA: THE CURRENT SUBSIDY AND TAXATION FRAMEWORK

PRESENTATION STRUCTURE – TAXATION

Understanding the basket of taxes faced by public bus operators

Previous research on taxation with observed trends

Overview of WRI’s tax research

Recent trends in direct and fuel taxation of public bus operators

Tax variations across states

OPERATOR FINANCIAL POSITIONS (2014-15)

*Note: DTC’s net revenue was INR -39,914 million in 2014-15; this axis was capped at -15,000 million to improve readability.

OPERATOR FINANCIAL POSITIONS (2014-15)

THE TAX/DUTY REGIME FOR PUBLIC BUS TRANSITAverage Cost Breakup for 48 Public Bus Operators - 2015

THE TAX/DUTY REGIME FOR MASS-RAPID TRANSIT

Wealth Tax Fringe Benefits Tax

Metro Rail Systems

THE TAX/DUTY REGIME FOR PUBLIC BUS TRANSIT

Stamp Duty Property Tax Excise Duty

Customs DutyVAT/Sales TaxEntry Tax

Octroi Motor Vehicle Tax Passenger Tax

Service TaxLabour CessMunicipal Levies

State Transport Undertakings/Transport Corporations


Stamp Duty

Property Tax


Excise Duty

Customs Duty

VAT/Sales TaxEntry

Tax/OctroiExcise Duty

Customs Duty

VAT/Sales TaxEntry

Tax/Octroi

MV Tax

Passenger Tax

Ad. Tax

Service Tax

Labour Cess

Municipal Levies


Stamp DutyProperty Tax


Excise Duty

Customs Duty

VAT/Sales Tax

Entry Tax/Octroi

MV Tax Passenger TaxAd. Tax

Service Tax

Labour Cess Municipal Levies

PREVIOUS RESEARCH ON TAXATIONAssociation of State Road Transport Undertakings 2005

The poor financial performance of STUs in spite of their improving physical performance is more due to the impact of the policies relating to motor vehicle tax, concessions and universal service obligations, unviable fare structure, and fuel price.

The total [Motor Vehicle] tax paid in 2004‑05 by 36 STUs … was about Rs.1,516 crores which represented 11% percent of their traffic revenue.

…the States have usually treated STUs as an important source of revenue while at the same time expecting them to provide inexpensive transport services to the people.

PREVIOUS RESEARCH ON TAXATIONKharola & Tiwari 2008

…of the total annual operating cost of a public transport system, about 19.02 per cent goes as taxes to the union and state governments.

The existing taxation structure is inequitable and not congenial for growth of bus-based public transport systems.

PREVIOUS RESEARCH ON TAXATIONMahalingu & Madegowda 2011

OVERVIEW OF WRI’S TAX RESEARCH

A more recent (post-2011) look at tax trendsVariations in tax across statesBest practices in taxation, both India and globallyThe effects of reducing taxes on public operators

10 operators surveyed; 5 city and 5 state operators City: BEST, BMTC, CSTC, DTC, MTC

State: APSRTC, GSRTC, KSRTC, RSRTC, UPSRTCFocus on direct and fuel taxes

Direct taxes: 2011-2015; fuel taxes: 2013-2015

TAX VARIATIONS ACROSS STATESMotor Vehicle Tax

%

FANCY

DIRECT TAX TRENDSCity Operators

DIRECT TAX TRENDSState Operators

DIRECT TAX TRENDSFinancial Position of City Operators after Direct Taxes

Sl. OperatorRevenue Position

2011

2012

2013

2014

2015

1 BEST

2 BMTC

3 CSTC

4 DTC

5 MTC

DIRECT TAX TRENDSFinancial Position of City Operators without Direct Taxes


2011

2012

2013

2014

2015

1 BEST

2 BMTC

3 CSTC

4 DTC

5 MTC

DIRECT TAX TRENDSFinancial Position of State Operators after Direct Taxes


2011

2012

2013

2014

2015

1 APSRTC

2 GSRTC

3 KSRTC

4 RSRTC

5 UPSRTC

DIRECT TAX TRENDSFinancial Position of State Operators without Direct Taxes


2011

2012

2013

2014

2015

1 APSRTC

2 GSRTC

3 KSRTC

4 RSRTC

5 UPSRTC

FUEL TAX TRENDSCity Operators

FUEL TAX TRENDSState Operators

FUEL TAX TRENDSFinancial Position of City Operators after Fuel Taxes


2013 2014 2015

1 BEST

2 BMTC

3 CSTC

4 MTC

FUEL TAX TRENDS


2013 2014 2015

1 BEST

2 BMTC

3 CSTC

4 MTC

Financial Position of City Operators without Fuel Taxes

FUEL TAX TRENDS

Sl. OperatorRevenue Position2013 2014 2015

1 APSRTC

2 GSRTC

3 KSRTC

4 RSRTC

5 UPSRTC

Financial Position of State Operators after Fuel Taxes

FUEL TAX TRENDSFinancial Position of State Operators without Fuel Taxes


1 APSRTC

2 GSRTC

3 KSRTC

4 RSRTC

5 UPSRTC

FUEL TAX TRENDSExcise Duty Revisions

COMPOSITION OF TAXES – DIRECT/FUELCity Operators

COMPOSITION OF TAXES – DIRECT/FUELState Operators

WHO GETS THESE TAXES?City Operators

WHO GETS THESE TAXES?State Operators

LET’S GET AMBITIOUSCity Operators


2013 2014 2015

1 BEST

2 BMTC

3 CSTC

4 MTC

LET’S GET AMBITIOUSCity Operators


2013 2014 2015

1 BEST

2 BMTC

3 CSTC

4 MTC

LET’S GET AMBITIOUSState Operators


1 APSRTC

2 GSRTC

3 KSRTC

4 RSRTC

5 UPSRTC

LET’S GET AMBITIOUSState Operators


1 APSRTC

2 GSRTC

3 KSRTC

4 RSRTC

5 UPSRTC

THE PRINCIPLE OF A TRANSPORT SUBSIDY

Maintain (or improve) service quality at affordable rates

Not to finance inefficiencies in the system

Inevitable across public transport worldwide

THE PRINCIPLE OF A TRANSPORT SUBSIDY

Technical Fare – User FareTotal operational cost

Number of passengers

Average fare paid per passenger

A product of WRI Ross Center for Sustainable Cities

THANK YOU

Economy & Finance

Bus Karo: Subsidy and Taxation Framework (Session III)