Additional sales tax on petrol?

CHENNAI: Starved of cash to fund ambitious urban transport projects, the Union government and the State government are working on an innovative finance mechanism using land as a resource as well as other levies or tax-es to create a Dedicated Urban Transport Fund.Sources told Express that the Union Ministry of Urban Development has urged the Tamil Nadu government to provide its input within 15 days on the concept of innovative financing of urban projects, including the Metro Rail project, last month.The decision by the Urban Development Ministry seeking the State government’s suggestion comes in the backdrop of financial constraints and other pressing demands of both Union and State governments in financing high capital intensive projects through gross budgetary support, sources said.The suggestions by the Union government include levying additional sales tax on petrol, additional registration fee on four-wheelers and two-wheelers, high registration fee for personal vehicles running on diesel, annual renewal fee on driving licence and vehicle registeration, congestion tax and green tax to draw sources for the Dedicated Urban Transport Fund at the State level.The Centre feels that inelastic demand of petrol with respect to price in a short run would ensure sufficient accruals to the funding, which would incentivise people to shift to the public transport system. The funds can be used for new projects in urban transport, compensate towards exemption of tax on urban buses and replacement of assets of public transport companies and towards meeting the cost of various concessions extended to encourage public transport.Similarly, there are also plans to generate fund out of betterment levy on land in areas that benefit by investment in urban transport projects, besides rationalisation of parking fee, property development tax, ad revenue on transit corridors and employment tax.